Wednesday, July 15, 2015

Commercial Health Insurers Not Only Are Not Going Away, They Shouldn't. Here's Two Reasons Why

Hugging a health insurer
It's an old conservative joke, but what is the one key difference between health insurers and terrorists? 

Answer: liberals only occasionally attack terrorists.

For the latest example of the continuing disdain for health insurers, check out this rather typical July 5 Washington Post article "Is this the end of health insurers?" After extolling one enlightened company's decision to self-insure its workers*, writer Sarah Kliff points out that hospitals can cut out the insurer middle man and offer the same service. The result, says the article, will be the wiser use of the premium dollars, lower costs and fewer coverage denials.

While the physician Disease Management Care Blog agrees that the health insurers' have only themselves to blame for their bad reputation, it doesn't think that these companies are going to go away anytime soon.  It's not because, under Obamacare, U.S. citizens are now required to buy their product at any price.  It's not because they control hundreds of billions of dollars.  And it's not because they've had the ear of the political class for years.

The contrarian DMCB thinks they'll continue to stick around because they perform a two useful public services:

1. Keeping Providers From Going Belly Up: There have been too many examples of hospitals and physician organizations being unable to collect today's premium dollars and hold them as a promise to pay for tomorrow's sickness.  Whether it's not charging enough or being unable to say no, providers are vulnerable to running out of cash and being unable to cover their insureds' health care bills.  The DMCB says it's better to insulate hospitals and doctors from the perils of the underwriting cycle.  Insurers do that.

2. Keeping Providers From Going to the Dark Side: Assuming a hospital or physician organization can hold the dollars, pay for all that health care and end the year in the black, there's a good chance that they'll do it by ultimately employing the same tactics used by many mainstream insurers: denials of services based on determinations of "medical necessity."

*As an aside, self-insured companies don't always act in the their employees best interest.  Look at this infamous example and note that Cigna only "administered" the insurance plan on behalf of a self insured organization.

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