The End of Health Insurance Companies by 2020?

Here's a bold prediction from a national expert on healthcare strategies, Ezekiel Emanuel, who predicts that the health insurance companies will be replaced by ACOs by 2020 (see: The End of Health Insurance Companies). I don't totally agree with analysis but first read what he has to say in the following excerpt:

Already, most insurance companies barely function as insurers. Most non-elderly Americans...work for companies that are self-insured. In these cases it is the employer, not the insurance company, that assumes most of the risk of paying for the medical care of employees and their families. All that insurance companies do is process billing claims. For individuals and small businesses, health insurance companies usually do provide insurance; they take a premium and assume financial responsibility for paying the bills. But the amount of risk sharing that is accomplished is limited because the insurers charge premiums that vary, depending on the health of an individual or a group of employees, and use their data and market power to identify healthy people to cover and unhealthy people to exclude from coverage....But thanks to the accountable care organizations [ACOs] provided for by the health care reform act, a new system is on its way, one that will make insurance companies unnecessary.

Accountable care organizations will increase coordination of patient’s care and shift the focus of medicine away from treating sickness and toward keeping people healthy....In addition to providing better and more efficient care, A.C.O.’s will also make health insurers superfluous. Because they will each be responsible for a large group of patients...they will pool the risk of patients who have higher-than-average costs with those with lower costs. And with the end of fee-for-service payments, insurance companies will no longer be needed to handle complicated billing and claims processing, nor will they need to be paid a fee for doing so. Payments can flow directly from an employer, Medicare or Medicaid to the accountable care organizations. A.C.O.’s will require enhanced information systems to track patients and figure out how to deliver more effective care, but this analytic capacity will be directed at improving health outcomes, not at imposing barriers to those seeking treatment.

I agree with most of what Emanuel says but differ on one significant point. Hospitals and hospital executives did not invent ACOs. They were not pining away for some new business model when the ACO idea was launched as part of the healthcare reform legislation. Most seemed to be happy with the existing business model under which they manage hospital revenue from the various payers of which the federal government and health insurance companies are the major players. In my opinion, they have little interest in "keeping people healthy" although they frequently pay lip service to the idea. They are in the business of treating disease in hospitals and maximizing their bottom line. Their dialogue with payers is roughly the following, as I see it: tell us what hoops you want us to jump through in order to be maximally reimbursed. The newest hoop, as part of healthcare reform, is the creation of ACOs. The development of these organizations is not the result of hospital executives yearning to be more entrepreneurial and wishing to supplant the health insurance companies.

I can't argue with Emmanuel's premise that "A.C.O.’s will also make health insurers superfluous." This scenario is very possible. My disagreement is that hospital executives will be anxious to assume a new set of responsibilities. In my opinion, they don't want to process billing claims and they don't want to be responsible for "improving health outcomes." To the extent that these duties will be urged or required of ACOs by the federal government, I think that the hospital executives will turn to external service organizations and consultants to achieve this goal (see: Hospital Executives Search for the Formula for an Accountable Care Organization). And who will be in charge of these external service organizations? Probably the current executives of health insurance companies or the healthcare consultants who helped the hospitals create the ACOs in the first place.

Comments

[Ruth Parker]

The importance of healthcare insurance cannot be felt until such time critical illness is affecting our health. There is an existence of insurance company which holds the responsibility of paying the hospital bills if we are having critical illness. I don't think there is an end of these financially inclined insurance companies by 2020 because there is a continuous increase on the number of people who are paying premium.

[Compare Health Insurance Rates at TheInsuranceQuotes]

New policy suggested by authority of America have two aspects one is in favor of government of country and other is in favor of country.But in the end it is only a suggestion which have pending approval in legislative houses of country.