Predictions As To The Demise Of The Health Insurance Industry

Ezekiel-Emanuel

I’ve been seeing a prediction from Ezekiel Emanual recently that insurance companies will be replaced by Accountable Care Organizations and hospital systems in various medical publications recently and now that The New Republic has picked up on this it is starting to be discussed in the blogosphere. Accountable Care Organizations are basically organizations of hospitals and physicians which form a network to provide care to Medicare patients, receiving financial rewards if able to provide the care more economically.

Conservatives are reacting with their usual knee jerk panic and ignorance. The Gateway Pundit, for example, writes, “Despite all of the accumulating evidence that government will be unable to manage the health care system in America, Emanuel is sticking to his guns and hoping for demise of insurance companies.” This evaluation is wrong on so many levels. First of all, the organizations which Emanual foresees as replacing insurance companies are private organizations, not government. Secondly, historical information has shown that government programs such as Medicare have been more efficient than insurance companies in managing health care in America. Thirdly, assuming that the blogger is referring to the problems with the roll out of the Affordable Care Act, the problems have been due to the use of private insurance companies to continue to provide insurance coverage. One lesson from the events of the past few months has been to verify that a single payer system would be far more efficient and easier to establish, regardless of whether this is the desired model.

Conservative blogs have also been quick to claim high rates of happiness with insurance companies prior to Obamacare but that is misleading as most people did not realize how vulnerable they were to problems such as insurance policies being revoked when people became ill and to caps on insurance coverage. Regardless, these problems have been eliminated under the Affordable Care Act and therefore are no longer an issue with regards to whether it is desirable to see insurance companies be replaced.

It is certainly possible that Emanual’s prediction will take place but personally I wouldn’t be so quick to predict the demise of the health insurance industry. I’ve seen a lot of changes in health care during my career. Lots of fads come and go. The insurance companies always seem to remain around. I’m not as certain as today’s fads such as Medical Homes and Accountable Care Organizations. ACO’s have not been around long enough to say for certain what will become of them, but so far the outcomes have not been what would be expected of an idea successful enough to begin to replace health insurance companies.

There are two different ACO models which vary in terms of how much risk they accept. The more they are willing to risk being out money if costs remain high, the higher their potential rewards. Many ACO’s which started out in the high risk model converted to the lower risk model after they were initially formed. Neither model has shown much success yet. While I receive lots of bonuses from various plans which are adopting pay for performance models, I have yet to see a dime from the ACO I belong to, and neither are many other physicians. Again it is still early, but this does not make me see a strong future for ACO’s at this time.

Hospital systems offering their own insurance policies isn’t a new idea. They have been doing it for a while, and I am seeing an increase in this. Success has been variable. They still have to compete with insurance companies, which have many more years experience in developing insurance products and marketing them. I suspect that plans marketed directly by hospital systems to both business and to individuals (through the exchanges) will grow over the next couple of years but I’m skeptical as to whether they will replace insurance companies. I also wouldn’t be surprised to see insurance companies profit from this trend, offering their services to assist hospital systems and ACO’s which desire to put out a plan under their name.

Again, maybe Emanual is right. If I had to bet on one or the other, my bet is that insurance companies will be around longer than Accountable Care Organizations.

Cross posted at The Moderate Voice

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