Going Beyond Insurance Reform


This week's question for the Washington Post Health Care Rx blog was:


Last week, President Obama admonished insurance company executives for excessive rate increases. He is taking aim at them again in his speech in Philadelphia right now. How much of our problem rests with insurance companies and how much is the result of other facets of the health-care system?


My response, Going Beyond Insurance Reform, is posted below. 


In 2009, the United States spent an estimated $2.5 trillion on health care. That same year, the profits for the top five for-profit health insurance companies totaled around $10 billion, generally 3-4 percent of their revenues -- a fraction of total health-care costs. So, while insurance reform is important, fixing our health care system will clearly require more.

We need to think more broadly about redesigning today's health-care system to drive innovation, better value and improved outcomes to be able to increase access. Our current system is based on a fee-for-service model that primarily addresses acute care issues versus today's health concerns, which are dominated by chronic conditions. The CDC estimates that more than 75 percent of America's health-care costs stem from six chronic disease states. And the number of people with chronic diseases continues to rise. Today, about 133 million Americans (nearly half of all adults) live with at least one chronic illness - and most chronic diseases require a lifetime of ongoing care. As the population ages, we must evolve our health-care system to more effectively address the needs of chronic disease patients -- improving care and managing costs. Further, we have to engage consumers in managing their own health - providing tools and information to support informed choices and holding consumers more accountable.

To support a redesigned health delivery system, we need the right types of insurance. Let's remember that insurance companies are designed to spread risk, but health insurance is unique because it's used for routine as well as catastrophic needs. People expect their health insurance to cover every doctor's visit, test and treatment, which is economically inefficient and establishes the wrong incentives for providers and consumers. People should pay for routine care and only tap into health insurance when they need to cover major, unpredictable issues.

Key to reforming health insurance is separating it from employment, which would guarantee that individuals would not lose their insurance even if they were to change or lose their jobs. Most importantly, it would encourage new innovation in the health insurance industry.

If people were responsible for paying for routine visits and procedures, they would demand greater transparency around the costs and effectiveness of their care, be more engaged in their health and consider more fully how their choices impact themselves and others. This would enable more innovation in insurance and health delivery and make health care more affordable for all.



Comments (5)
  1. Ariana says:

    This article is terrific and up to date. I totally agree with the writer regarding all this stuff.

    I also came across a site that seemed interesting to me regarding the same issue,you can also check out them at http://www.health-insurance-houston.info/


  2. Ian Hepburn says:

    I don’t agree with your proposal that people pay for routing visits, etc., and only use insurance for catastophic events.  Most people can’t afford to pay for to pay for it.

    I think the reason that so many people suffer from chronic conditions is because they did not have adequate preventative care, did not take care of routine things because they couldn’t afford it, etc.

    Insurance-based health care will always have an incredible overhead cost where the insurance companies spend zillions of $ analyzing claims, denying coverage, etc.  

    As in most of the industrialized world, medical care in the US should be a human right, not a for profit business.

  3. Douglas Thompson says:

    For many years, America’s health brokers have been offering health insurance to individuals, small businesses and large businesses for decades, yet the enrollment statistics have revealed a steady decrease on an annual basis.  The number of uninsured Americans is estimated to be as high as 30 million, and the Health Care Reform Act offers a solution.  Not only will there be a higher enrollment number for America’s health brokers, but as of 2014, it will be required by law for every American to obtain health insurance.  Every single American will be impacted by the New Health Reform Bill, making it one of the most important measures of the 21st Century.


    The main focus will be on businesses of 50 or more employees, in which they will be required to offer individual health plans, as well as family plans to all employees or face some stiff fines from the government.  The amount comes to $2000 per uninsured employee, though there are exemptions to this fine.  If you as an employer assist an individual with acquiring a personal health insurance plan through an open market called an exchange, then it would result in no fines.  This only applies to an individual who makes a certain amount under the Federal Poverty Level, and the premiums are over 8% of his annual income.

    America’s health brokers can rest easy in the fact that there will be expanded coverage, though there may be more competition.  With the rise in individuals who will have health insurance, there may not be as large of a risk as one may assume.  Though the new bill will require America’s health brokers to enroll individuals with pre-existing conditions, there will also be a new population of young individuals who will be insured with fewer health problems.

    It is understood that larger companies already provide a group insurance plan (HMO, PPO) that covers all areas of needs for the population of employees.  These policies will change very little, but there may be some changes in where the funding for the new health care plan will come.  It is proposed that those making a certain amount of money, both individuals and couples, will be taxed at a higher percentage than others.  This will provide money that can be used for the exchange and making sure that all individuals will be offered an affordable health plan.

    There are still a few years before the plan goes into full effect, though some of the measures will be enforced immediately.  There will be plenty of time to sort out the details and iron out the difficulties.  As for the plan, anyone who does not have health insurance as of January 1, 2014, will be penalized a certain amount of money, and this amount could become worse if health insurance is continuously neglected.  There has never been a better opportunity for America’s health brokers in terms of acquiring a new customer base-a broader customer base.  Also, there has never been a better time in history for individuals being provided with the resources for the necessary medical treatment.  This is a very unique time, with history in the making.  Finally, there will be health care for all.

  4. shawn says:

    Peter, what are you doing to introduce the concept of co-pays at your employer?

  5. Kas says:

    you are on the exact point that "Key to reforming health insurance is separating it from employment, which would guarantee that individuals would not lose their insurance even if they were to change or lose their jobs. Most importantly, it would encourage new innovation in the health insurance industry"

    these are the words/action that is required either it is possible or not, this should be granteed.


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