The End of Health Insurance Companies?

Imagine: No more health-insurance companies. That’s what Ezekiel J. Emanuel and Jeffrey B. Liebman, former advisors under President Obama opined in a blog piece posted on The New York Times website on January 30. The two authors boldly predicted the end of health insurance by 2020 in what many might optimistically view as the health-care equivalent of President Kennedy’s declaration that the United States would land on the moon by the end of the ‘60’s. After all, even on their best days, health insurers don’t win many popularity contests.

Emanuel and Liebman accurately depict many of the mega-forces taking place in the health-care market today. Employers are taking on more financial risk for health benefits as they become self-insured. The government is driving reimbursement reform with its Accountable Care Organization (ACO) pilots, and private insurers are following suit.

There’s a lot to like in their arguments, and yes, we have reason to be optimistic that improvements are being made to our health-care system. In declaring the death of health insurers, however, Emanuel and Liebman have fallen into the all too familiar, medical-establishment trap -- oversimplifying the roles insurers play and exaggerating the medical field’s ability to take on these functions.

Let’s start with the premise that health insurers will become extinct by 2020. The hard reality is that health insurance, properly viewed, has been extinct for at least the last 20 years, perhaps longer. The employer purchasing model and previous reforms that placed limits on underwriting and pricing saw to that.

Today, insurers serve as financial intermediaries that provide a variety of services necessary for our health-care system to function properly. Would we feel better if we didn’t know that some doctors practice medicine outside the mainstream of currently accepted practice or science? Insurers help inform us of these instances.

Similarly, would we feel better not knowing that different health systems charge much higher prices for identical services, or that their outcomes place patients in greater jeopardy than if care were delivered at a different health system? Insurers help inform us of these instances.

Having said that, there is much to like about the ACO model, starting with the fact that health systems and practitioners will ultimately be accountable for delivering care outcomes within a predefined cost target. The irony is that thus far, the presence of private and public health insurance programs has helped create a system in which mediocre outcomes have been acceptable and escalating costs have been almost guaranteed.

Emanuel and Liebman look forward to a day when ACO’s are unencumbered by health insurers and have accountability for making decisions that promote health while eliminating barriers to treatment. The risk in predicting the end of insurers, is that we blind ourselves to the fact that many functions insurers perform remain necessary, and must be transferred to another entity.

For example, what will an ACO’s response be when the best medical science points practitioners in a direction that runs afoul of current medical practice and popular opinion? ACOs will have a clear choice: Either continue practicing under the old paradigm and deliver suboptimal care, or become the new gatekeeper that stands in the way of delivering sub-optimal care patients have come to expect.

ACO’s that take the gatekeeper role seriously will provide an important, social benefit. Practitioners are inherently better positioned to manage patients through the evolutionary changes that will take place in how medicine is practiced, and will be more likely to assuage their patients of the value associated with future changes in the way medicine is practiced. On this front, insurers have failed miserably.

Will ACO’s take on this role? Only time will tell.

The problem with predicting the demise of insurers, is that this view risks celebrating the death of the messenger – in this case, health insurers. This outlook also invites a visceral, celebratory reaction from many quarters that we’ll solve all our problems by eliminating insurers. There’s much to dislike about health insurers, but it’s naïve to think that simply moving them off the stage of health care will solve our problems. Unfortunately, our problems are more fundamental and aren’t confined to the insurance function.