Health Insurance Managed Care

Early Medical Cooperatives

In the days before health reform’s pasage, many reform proponents argued for the advent of co-operative healthcare systems or “co-ops”.  Co-ops, however, have been around for a long time before that.

In the late forties, over a hundred small rural health cooperatives were founded.  Nearly all of these were in the Southwest, fifty in Texas alone.  But, opposed by doctors and short of resources, few of them survived for as much as a decade.  Such small cooperatives were not actuariallly sound.  They might perhaps have been saved by an extended, federated form of organization that would have allowed them to gain stability from larger scale, but this they never achieved.  So although they originated as a rural movement, the medical cooperatives, such as they were, survived primarily in cities.

Who governed these cooperatives?  There were three general models.

Group Health Cooperative was owned by its membership, who voted on a one-member, one-vote basis to elect trustees and to make major policy decisions.  The cooperative sought active participation by conducting referenda by mail and periodic assemblies.  Kaiser, on the other hand, declined to give its subscribers any role in governing the plan.  Power resided in two corporations controlled by the Kaiser family and its company executives.  HIP, yet a third type, was governed by a self-perpetuating board that included liberal representatives of business, labor, the medical profession, and government.

For more information on the history of managed care, see also this Brief History of Managed Care from the Tufts Managed Care Institute.


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