Group Health’s Pricey Panacea

Anyone who thinks the local co-op is the cure for our insurance-reform woes should examine the bankruptcy case of Eugene and Yukiko Gatlin.

Two weeks ago, as the national debate over health care began to fixate on cooperatives like Seattle's Group Health as a possible model for reform, Eugene and Yukiko Gatlin filed for bankruptcy protection. The Tacoma couple, neither of whom receives health-care benefits through work, had racked up $50,000 in credit-card debt in order to pay their insurance premiums. The institution through which they were insured: Group Health.The Gatlins' story points to a central problem in relying on cooperatives to solve the nation's health-care ills. Judging by the track record of Group Health, one of the two pre-eminent cooperatives in the country and a health-care provider as well as insurer, such organizations won't address the biggest ill of all: the masses of people who can't afford coverage. Here in Group Health's home state, 13 percent of the population is uninsured, according to Washington State Insurance Commissioner Mike Kreidler. If you take out children and the elderly, who are targeted for government programs like Medicaid and Medicare, the number rises to 20 percent.Sean Neary, spokesperson for U.S. Senator Kent Conrad (D-North Dakota), who is leading the charge for a reform plan that focuses on cooperatives, says the plan does contain other measures that will help control costs. Still, the Senator's Web site stresses the creation of co-ops as the vehicle to affordable health care, claiming they "would provide greater value by returning surplus revenue to members in the form of lower premiums."But evidence in Washington suggests Group Health customers are not enjoying lower premiums. "There isn't much of a marked difference in the price," says Krei-dler, who worked at Group Health as an optometrist for 20 years before running for public office. "If there were, everyone would have ended up joining [Group Health] years ago." Instead, just under 20 percent of the state's health-insurance patients belong to the organization.Overall, Washington's insurance rates in the individual market (people buying coverage for themselves) are somewhat lower than the national average. But whether that is attributable to the presence of Group Health is debatable. Some states with no co-ops have even lower rates.The Gatlins formally declared themselves broke on August 17 in U.S. Bankruptcy Court in the Western District of Washington. By far, the biggest expenses they list are their mortgage, for which they pay $1,515 a month, and their $1,434-a-month health insurance, which had covered them both. The insurance alone ate up more than a third of their combined net income, according to the documents. Eugene works the night shift as a broadcast engineer for KCPQ, the Fox TV affiliate in Seattle. He says he gets paid by the shift and usually works three nights a week. Yukiko works as a day-care teacher in Tacoma.Four days after filing, Eugene, a portly 50-year-old with a salt-and-pepper beard and large glasses, sat in their rambler on the south side of Tacoma and explained that their problems started in 2002, when he was laid off from a longtime job as a multimedia technician at Pacific Lutheran University. From 1984 until then, he had been covered by Group Health through his employer, and paid a small amount extra for his wife. As he scrambled to find work, first taking a graphic-design job at a sporting-goods store and then landing his position at KCPQ, he and his wife started paying for Group Health insurance out of their own pockets. The initial cost, he says, was $630 a month for them both.The plan was a good one, charging them just $7 for an office visit and $5 for each medication. The drug benefit was crucial. He has diabetes and high blood pressure; his wife has rheumatoid arthritis, among other problems. Their medications would have cost $3,000 a month without insurance, according to Eugene.But, he says, "They kept on raising our rates." In 2003, Group Health increased the cost of premiums in the individual market by 24 percent, according to figures from Kreidler's office. The rate hike was roughly comparable to those of the two other big players in the market, Premera BlueCross and Regence BlueShield. Over the following years, Group Health's average annual increase, 10 percent, was lower than Premera and Regence, but only by three to four percentage points.Rather than lower prices, Group Health's director of public policy, Karen Merrikin, says what co-ops offer most is responsiveness to members. All Group Health patients can register to become members, allowing them to vote in Board of Trustees elections and sit on various committees. (Nevertheless, only about 6 percent of the organization's 600,000 patients have registered to become members.) Group Health enthusiasts also point to its emphasis on primary care, innovations like e-mail visits with doctors, and integration between primary-care physicians and specialists, all of whom receive a salary and therefore have no financial incentive to encourage unnecessary visits and procedures.Group Health's advocates and promotional materials claim that some of these measures save money, so you might think rates would be lower. Joshua Welter, an organizer with Washington Community Action Network, a liberal health-care advocacy group, contends that Group Health maximizes profitability "just like any other insurer." Merrikin counters that her organization offers better value than its competitors because "there are a lot of things bundled with Group Health's plans [like the e-mail visits] that you aren't going to find elsewhere."Merrikin also says Group Health maintains an assistance plan for those having trouble paying their premiums. The Gatlins at one point took advantage of the plan, which paid their premiums in full. But the assistance only lasted six months.The rest of the time, the Gatlins kept up with the cost by using credit cards and twice refinancing their house. They took out a mortgage for $58,000 when they bought the rambler for $115,000 in 1999, he says. They now owe $193,000 on the property, according to bankruptcy records.Eugene says the final blow came in July of this year, when the Gatlins' premiums rose from $1,224 a month to $1,434. "That became unaffordable," he says. They stopped paying. Eugene says he intends to look for a cheaper plan, but hasn't gotten around to it yet.In the meantime, he and his wife are making do with the two-month supply of drugs left from their most recent orders, supplemented with herbal medicine from a Chinese store at the Great Wall Mall in Kent. And, for Eugene, "lots of green tea."

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