Zeke Emanuel’s editorial in the New York Times — The End of Health Insurance Companies — really got my blood boiling. It’s irresponsible and naive. Former Obama advisor Emanuel “predicts”:
By 2020, the American health insurance industry will be extinct. Insurance companies will be replaced by accountable care organizations — groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients.
Irresponsible
Provoking and demonizing health plans might have had populist appeal and political value in 2009, but in 2012 it’s an unnecessary attack on a constituency that has potential to be one of the administration’s best allies in advancing accountable care.
Prior to ACA reform legislation, health plans had the wrong economic incentives — the rules of the game were not consistent with good public policy:
- Health plans had incentives to AVOID risk, not manage risk. They were economically incentivized to avoid high risk patients (with preexisting conditions) and to get rid of patients that became sick
- Health plans had minimal incentives to CONTROL systemic costs — they could pass them on in the form of premium increases.
ACA changed incentives and disrupted the payer business model:
- Health plans will longer be allowed to avoid high risk patients; they must accept all comers
- Health plans must MANAGE, not avoid costs. Health plans are abandoning their old business models.
What are we seeing in the marketplace? Almost all health plans are embracing the vision of accountable care and need to shift the system from Volume to Value. Health plans could be administration’s biggest friend in revamping the health care delivery non-system.
Naive (more…)
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Sign in nowGo Vince…
I will take the counter point position, though I suspect at some level this may be a semantic argument at core.
I agree with Emanuel’s basic argument. Health plans are dinosaurs, not just from a populist perspective. Once upon a time the GHAA was a group or revolutionaries committed to making a difference. Today, it’s a ‘meet the new boss, same as the old boss…’ experience.
Health plans remain the weakest link in the value proposition of healthcare financing and delivery food chain.
Nice to see you recognize the contributions of the Act as some of its provisions do indeed level a playing field that was impossible to discern between self funded health plans, state regulated health insurance practices, and that slice of Federalism which standardized at least the HMO sector.
Yet, health plans today resemble little if any of their prior selves as ‘risk managers’ or delivery system architects and co-managers, i.e., an indemnity carrier acquiring an HMO book if business if you will. Remember Aetna’s acquisition of US Healthcare? #epicfail…
Other than the individual market, health plans have morphed into risk avoidant transaction processors, with an underwriting churn of 2 – 3 years of recycling commercial accounts. They insure precious little.
If health plans are to survive and add value, if not enable, the emerging ‘accountable care’ industry, it will be as defacto ‘utility companies’ partnering with local and regional delivery systems. They do have their core skills sets (including underwriting, marketing, member/provider administration, and private label product development) that can add value to the healthcare delivery proposition. Yet it remains to be seen if the vision exists to enable this purposeful transformation. There is some evidence to warrant optimism.
Irresponsible, I don’t think so. Also, the ACO industry need be unbundled to understand it’s components. This is not a homogeneous effort.
As a historically reform resistant industry, who’s maximized returns under a fee for services paradigm, you seem to cut a considerable degree of slack for an industry-wide culpability to NOT heal a long failing, and unsustainable business model with precious little community benefit.
Gregg, Thanks for your comment. Agree, our differences might be more semantic than real.
I’ll go so far as to acknowledge that Zeke’s scenario of health plan demise is “plausible”, but he loses me when he “predicts” this will happen. When there is uncertainty in the marketplace, it’s far more constructive to develop plausible scenarios rather than try to be a fortune teller.
Prior to ACA, health plans had the wrong policy and economic incentives. You can choose to call them “evil”, or you can change the rules of the game. ACA does the right thing in changing the rules of the game.
Agree that health plans have a long way to go, but in my talks with health plan execs, the “get it” – they understand the need for change and that the old business model is not viable.
Cutting health plans slack? As a consultant I work across industry segments, so I’m not writing as an spokesperson. I agree health plans have a lot of morphing to do.
Fundamentally though, I think we would agree that we need to build a more collaborative health care system. Zeke’s editorial throws rocks at a time we need to be throwing flowers.
Have collected thoughts in my own OpEd: Emanual NYT Editorial is Irresponsible and Naive http://t.co/LpWnTj0g #ACO #HCR
RT @VinceKuraitis: Have collected thoughts in my own OpEd: Emanual NYT Editorial is Irresponsible and Naive http://t.co/ewhdQtSS #ACO #HCR
Good article @VinceKuaitis Op Ed: Emanuel NYT Editorial is Irresponsible and Naive http://t.co/z85lAm4M
@ahipcoverage fyi, http://t.co/LpWnTj0g. Rebuttal to Emanual NYT OpEd
@ahipcoverage fyi, http://t.co/KCtRGloS. Rebuttal to Emanual NYT OpEd via @VinceKuraitis #aco #acochat
Op Ed: Emanuel NYT Editorial is Irresponsible and Naive http://t.co/oIaid2oM #HIT #HealthIT
Op Ed: Emanuel NYT Editorial is Irresponsible and Naive | e-CareManagement Blog http://t.co/AcGUst3U
Op Ed: Emanuel NYT Editorial is Irresponsible and Naive | e-CareManagement Blog http://t.co/ZdgewhE6
RT @2healthguru: @ahipcoverage fyi, http://t.co/10r20yhV. Rebuttal to Emanual NYT OpEd via @VinceKuraitis #aco #acochat
.@VinceKuraitis offers (mostly) constructive retort to Emanuel’s NYT #ACO OpEd: http://t.co/gdeULibf. I'd leave actuarial risk to insurers.
Op Ed: Emanuel NYT Editorial is Irresponsible and Naive http://t.co/IWVLD2vz agreed 100%
Human behavior, at individual or group levels, responds to incentives. As you rightly observe, Vince, insurers (and they aren’t alone) have not been rewarded to manage risk or costs in a way that fully aligns their interests with their subscribers. Such alignment could ultimately yield huge boons to both insurers and their subscribers. However accomplishing that alignment (and I believe that innovative delivery models like ACOs and PCMHs are key to that effort) will require long-term analysis and improvement across all parts of the healthcare system. These efforts will reach far beyond this current political administration and must engage all parties in delivering ultimately effective care at reasonable cost. I hope you are right that payers/insurers are willing to make the long term commitment to figure this out and not hope for the reinvention effort to flame out as in earlier efforts.
Valerie, Great observation, thank you.
Yes, incentives have changed. The light bulbs have gone off in health insurers’ minds. Yet there is still a lot of work to do, none the least of which is a change of mindset from “control” to “collaboration”.