we will settle this one way or the other. i think you'll see enormous pressure on president obama to do something. nuclear negotiations will probably reopen. i'm not sure how far the will go. host: robert baer, former cia operative, andauhto author of ts book, from berkeley, california. we appreciate your calls and will be back tomorrow. here's a quick look at our guests. this week the commission plans to release the report at $9 trillion. so, our guest will speak to that. also president of the national organization for women.

the topics -- abortion and single-payer healthcare. mike evans will also be along. he talks about president carter and the policy with israel. enjoy the rest of your weekend. see you tomorrow. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] . .

>> our guest this week is the president and c.e.o. of group health cooperative mr. armstrong. thanks for joining us. >> my pleasure. >> also joining us in the questioning, nole of the los angeles times and david with mclatchy newspaper. he is their national reporter. >> mr. armstrong, if i'm sitting in wherever, charlotte,

north carolina, sacramento, et cetera, and i'm being told that your model is the one that congress may adopt, what does that mean in english? what does that mean to me, the consumer who is so baffled by all this health care news? >> i can describe how it works. basic like cooperative, it's not for profit. our board of trustees is elected by the patients themselves from among the patients. we contract with or we employee an integrated medical group which is really a critical part of what you would experience anywhere if you saw a cooperative like group health because it's a way in which we have a real impact and our view is that ultimately that's the way you change health care. and then finally you would experience an organization that brings together through its business model the financing, the up-front insurance

functions, full, along with this integrated care delivery system or group practice. being a model then that allows you to innovate in ways because you have both a financing and care system, being a model that allows you to innovate in ways that derive better health care outcomes. >> talk to me as a consumer, not as a member of congress, with all due respect. will i be able to keep my doctor? who will i call? suppose i got sick tomorrow. will i pick up the phone and call someone? talk to me as a consumer and tell me what this means. >> actually, our view is that the best health outcomes, the best care, the way this model works is by giving patients as ready access as they possibly can get to the health care needs that they need when they need it. and so what you would experience and what our patients experience is access

unparalleled, access that doesn't just require patients to show up but in fact we're investing in primary care models that allow our doctors to have time to e-mail with their patients, that allow our doctors to have telephone conversations, making the presumption that better access to primary care, engaging in relationships with our patients through a health care system that accommodates what patients requirements are early on quickly is the best way to promote health. that's what you should expect to see in a cooperative. >> there are other health care systems in the united states that also invest in primary care that also allow communication between doctors and patients. is there something about the co-op model particularly that makes that more likely? >> well, probably a couple of things, although it's hard to compare our model with

genericically a lot of other systems. first, is a cooperative, we do have a governance structure where our board of trustees, my boss, are our patients that we care for and are elected from among the patients. and, as a result, there's a kind of accountability about making sure that our decisions about care system, premiums or benefit structures are all vetted and endorsed by and supported by the patients who are fairly directly, i mean, very directly affected by these decisions. beyond that, we, as i said before, are bringing together this financing model with the care delivery model so that the innovations that we're able to invest in through that system are going to be the innovations that patients will really experience quite directly their access to electronic records, their access to physicians, nature of a care delivery system, these are all features

i would expect patients to be able to experience if a cooperative in the form of group health cooperative is replicated in other areas. >> now, do you think your cooperative is about, what, 60 years old, is that right? guest: 1947 was when we were founded. that's right. >> and there are a number of other cooperatives i know around the country that have slightly different models that don't have this kind of integrated delivery system the way that you do. if one were to create one from scratch, where you group together a number of scommurems and presumably try to get a network roff providers, hospitals, et cetera, together, how easily could that be done and how long could it take to replicate your model? >> you know, it's hypothetical. i would say that i am an expert on running our system, not necessarily on creating our system. it is complicated, but i think

there are ways in which you can create many of the basic features that allow an integrated system that is consumer governed to exist. and, that the hardest part of, in my view, the hardest part of replicating what is valuable about group health is the investment in a different kind of payment mechanism for holding together a care delivery system, creating integration and alignment in our care delivery system that focuses the different components of that delivery system on a single so common goal, which is the better health for our patients. in our fee for service system that is really ant thetcal, actually, this idea of a common goal shared by the different providers. so i think, frankly, overwhelming care systems that are designed around the fee for

service reimbursement schedules is probably the greatest barrier or the greatest hurdle to hep kating this. >> i want to go back to your point about accountability. a report i saw said that fewer than 1% of enrollees voted in the last election. is that accurate? if it is, what does that say about accountability? >> to be frank, i don't know exactly what the percentage is but it is a relatively small percentage of our members. while voting is an act of active consumer participation, the principles and the ethic within our organization shows up in all sorts of different ways that are frankly quite pervasive. our board of trustees, as i mentioned before, are elected by a vote of our membership. but we hold community or consumer, patient, council meetings and our medical centers all across the state.

our board meetings have open sessions where people are invited to come. and once a year we hold our annual meeting where we fill an enormous ball room full of group health members, our patients, to come and hear a report from me and our annual status of our organization. we bring policy experts from around the country in to speak to the group. the group votes on buy law changes to our constitution. and so it is, there are a lot of different ways in which this ethic or this principle of active consumer governance plays itself out beyond just voting for the trustees. >> have you been able to track at all if way that the consumers, the members are behaving in a way that may be different from your traditional relationship between a patient and his or her medical system or his or her insurer? we certainly hear a lot in the current environment of patients who have disputes with their

insurers about what should and shouldn't be covered. and of course there are cases of complaints about poor care. have you been able to show at all that either of those are less than the average because of this kind of cooperative arrangement? >> off the top of my head, i really don't have statistics that compare us to some of our scommuent averages. i can tell you, though, that we have a process of appealing coverage decisions that involves members of our scommurem governance process. so people who are patients, who are enrolled in group health participate in a process by which these decisions get made. our desire is for those issues to be addressed through the relationship that our providers have with our medical providers or that our patients have with our medical providers. our feeling is that if patients

are engaged in a deep effective relationship, particularly with their primary care provider and their team of people that works with them that there won't be the miscommunication, there won't be the issues that often leads to those kinds of concerns and so i don't know the data but my belief is that the principles we apply to our relationship with patients will serve us well with respect to that information. >> let me address the issue of cost and consumers. again, reports i've seen, authority tative reports say that annual premium increase were roughly 12% during this decade in group leltsdz. correct me if that's wrong. 12% is well above the rate of inflation. so what incentive is there for a healthy consumer to join a co-op? >> first, i would look at the inflation rate for the premiums

for group health relative to the inflation rate for our competition in this marketplace. i think if you did, you would find that we are better than our competitors by some incremental amount. not by an enormous amount. so that really would be the point of reference. second, what i would say is that group health is serving a region in our country that is costing the average enrolled person or the average patient quite a bit less than the cost incurred by patients in other parts of our country. so overall group health is contributing to performance on a cost per member per month basis in a region that's demonstrating excellence, actually setting certain standards in the medicare program as an example that most other parts of our country would be envious of.

>> if the 12% figure is correct, and i have every reason to believe it is, that's still three, four, even five times the rated of inflation during the decade. why? why is it so -- why? >> well, you return to answers to that question that apply not just to group health but to the health care industry much more broadly and the answer is in the form of demographics, new technology, new drugs, you name it. group health as an integrated care system that cares for the overall health for the population of patients that we serve is influenced by those very same issues. but the difference in group health and the difference in this integrated model is that we believe that by engaging our providers and our patients in an integrated care delivery system that we can manage care

rather than managing the actuarial risk of this population. we believe that we can invest in innovative approaches to not just hour our care system works, whether it's primary care, specialty care, in our hospitals, but we can engage our patients in an active relationship through access to their clinical information, through being participants, active participants in decisions where we know their preference is very influential and what actually the treatment is that they end up pursuing. this kind of engagement is part of what we believe will drive down those expense trends and are part of a care management process that i truly hope ends up becoming part of how the federal reform discussion unfolds and that -- my hope,

too, is that the attention that group health is getting as a cooperative model helps to amplify the importance of this kind of delivery system reform. >> let me ask you a little bit about that, if i could. i realize you're 3,000 miles away. but from what you see of what's in the health care bill thus far, we've heard a lot of talk about just creating co-ops. you're talking about something a lot bigger than that, which is actually changing the way medicine is practiced in this country. do you see in what's being talked about in washington the kinds of delivery system reforms that could achieve the results you're talking about? >> i am seeing glimpses of it. i would just say first to answer your question sort of indirectly, the discussion largely about the public option and the public plan is really

missing a discussion about health care delivery system reform. to the degree that a public plan is simply a vehicle, whether it has much of a life span any longer or not i'm not really sure. but to the degree it's simply a vehicle by which we can impose medicare rates on our providers, and basically overall lower the reimbursements to our providers, it's a proposal that does nothing to change the way in which the care delivery system actually works. if a cooperative on the other hand is a vehicle by which we can use federal policy to begin to force regions to begin to imagine how the care delivery system might be reorganized through payment reform, through pushing the integration of care systems, through the engagement

of patients and gove governments but also in their process, i think those are the kind of pribspls that are really going to make a difference. and as the co-op discussion unfolds, my hope is that's where you begin to see more discussion about the health care system. >> you're watching "newsmakers" with scott armstrong, the president and c.e.o. of the health cooperative. joining him in questioning are noel levy and david lightman. >> we may need a separate half hour show for this but i'll try anyway. regulation, who regulates? what do they regulate if you set up a national system of co-ops? >> you know, i, again, i'm very proud of how well i'm able to run group health cooperative. but in terms of setting federal policy around how you regulate things, it's really beyond my

ability to comment to too specifically. i would say at least in general terms there needs to be a rational federal set of standards, but my view is health care is local. and different states have insurance commissioners and have regulatory structures that work and that work well for a reason. they need to continue to be relevant to how those regional care delivery systems and regional plans also work. beyond that, until there are some specific proposals to react to, it's very difficult for me to comment. >> let me go back, if i could, for a moment about creating co-oops and imbuing in them presumably the ability to do the kind of creative delivery reforms that you've been talking about. can you talk about how group health came together as a co-op and how both the cooperative

structure worked initially as well as the provider network that group up around that? >> group health was founded in 1947. it was a group of innovative forward thinking local community leaders along with physician leaders and others who were worried about the cost of health care, were worried about the unexpected expenses, and believed that there was a better way to put together a care system and pre-paid financing. we still have active in our consumer goffnans some of our founding members, in fact, who were participants in these great debates where people mortgaged their homes to help fund up front this group health cooperative idea. and it's incredible the stories that they tell. what's also incredible is how over 62 years we still endorse,

live by, are successful because of some of those very same principles that those founding members were inspired by when they put group health together. consumer governance, pre-paid access to primary care, assurance that your care is the concern of our care delivery system over the course of time, through the full continuum of different care providers. you know, an active knowledge of our care system about what's happening to our patients every step along the way. those are features now that have helped group health to become more than 620,000 member plan. we're a big, complex organization, with more than $3 billion in annual revenues. and yet, these principles that were true to our founders continue to distinguish us today. and, i believe are the kinds of principles that really would be

valuable components to whatever unfolds in the federal reform discussions. >> would that mean, in other words, to replicate what you have done in presumably less than 60 years, would it require then that you have both a pool of customers as well as a ready network of doctors, clinics, and hospitals that would have to come together probably at the same time? >> i think you would have to make investments in a not for profit organization, in a process where you have patients actively involved as consumer governance structure of some kind. most important, you will need to build a care delivery system that's either employed or engaged in some kind of pre-paid -- i hate to use the term, but i will, cap tated kind of payment structure and you need to build an

organization that can bring this up-front financing into alignment with a care delivery system that you are constructing, such that you can invest in those innovations that are current fee for service reimbursement model simply does not provide. and i think there are many examples around the country where we are making good progress already on creating some of the features that i'm talking about. there are large integrated group practices that are already doing the kind of work that i'm talking about. and you hear many of them referenced on a regular basis. the idea that in medicare we would be contemplating bundled payments or some kind of premium payments for good quality care or great outcomes, these are the kinds of policies that i think begin to start stepping us toward what i believe you would have to do if

co-ops were to become or something like a cooperative was to become more of an organizing principle. >> you say, the models are there, the discussion has been extensive, and yet still the politics as you know is a problem. what's the biggest misunderstanding people have about co-ops? >> well, first you are right, i have been very impressed by the difference between the policy discussion and the politics of all of this. but you all probably are less surprised by that an i would be. it's hard to say. i think that it's really hard to say what would be the -- it's an endless list. >> gist me one. -- give me one. give me one misunderstanding. we want to clear up here on the

show. >> well, i think that the fact, i mean, a lot of people have had this perception of cooperatives as being kind of this folksy kind of unsophisticated organization that is really built around old notions of what h.m.o.s used to be, that cree ated restriction to access, compromised on the quality of investments that that he made. for anyone that would look at group health cooperatives today, you would see that it's really quite different from those old dated perceptions. you may know that group health recently was named by consumer reports as the number one h.m.o. in the entire country. you may not know that the pugent zone health alliance is an organization endorsed by star bucks and boeing and other

organizations in the area and they publicly report through their report card on the quality of clinical care against a series of specific measures. group health care providers on 15 different measures most recently were rated number one on 11 of those measures. and on and on. there are all sorts of evidence that demonstrates that this is not your grand mother's hmo. this is a model that is working in this marketplace that offers insight into how this federal reform discussion could really unfold. >> i realize we're putting you on the spot here a bit as the representative of co-ops and their history. but as you probably know, there's a long history of failure in the co-op world of health care as well. can you talk a little bit about why so many of the co-ops that have started over the course of the last 50, 60 years are no longer with us? >> well, as your question

implid, you're right, i don't really pretend to have a great answer to that question. i would presume, however, that it may go back to the comments i was just making. and that is, running group health cooperative is a complex business. we have more than 9,000 employees, we have a medical group of almost 1,000 doctors. we collect more than $3 billion in revenues on an annual basis. this has to be run and managed in a way that is up to the challenges of such a complex organization. and i think people have been led to believe that cooperatives aren't like that for some reason. i guess part of that reason is that many of them weren't and that they aren't with us any longer because they weren't so well run.

>> try to tell me in lay terms, you have a cooperative but people could also choose their own doctors. as i understand it in your state a small percentage of people use the cooperative. so on a national level, if only 10% of people use the cooperative, how would that solve the current health care dilemma in this country? >> in our system, there are 600,000 people who choose a group health insurance plan. two thirds of those patients get their care within our medical centers with our physicians. those patients who get their care within our care delivery system, we have relationships with them that allows us to implement the kind of innovations i've been talking about. for the rest of the patients, i think you're right, i think it's difficult without some kind of payment reform to make a change in how those patients care would be improved. but i think ultimately the

answer is applying to care delivery systems a different approach for payment that aligns each of those providers around a common goal that goal is the health and the improvement of the health of the patients that that group of physicians cares for. >> scott armstrong is the president and c.e.o. of group health cooperative. mr. armstrong, thanks for your help today. >> my pleasure. >> we've heard a lot about the local theme, so to speak, when it comes to health care co-ops. is there anything that you heard that causes you pause or at least a question as to how this might apply to a larger model? >> i thought mr. armstrong talked about particularly at the end in terms of the complexity of his organization as well as the sophistication of both the insurance component of group health as well as the, he talked about the del