The End of For Profit Insurance Companies

So claims the CEO, Chairman and President of Aetna Insurance, Mark Bertolini. He was speaking at a health-related conference in Las Vegas, and told his audience:

“The system doesn’t work, it’s broke today” Bertolini told attendees. “The end of insurance companies, the way we’ve run the business in the past, is here.”

Yes, even insurance companies get that their current lifespans are brief (from the article above):

Bertolini said an amalgamation of regulatory, demographic and economic factors were driving this change. The Affordable Care Act in particular, with its ban on medical underwriting, had made the traditional health insurance business model untenable in the long term, he said. Nonetheless, he offered measured praise for the law, even citing the controversial medical loss ratio rules as having a smoothing effect on premium swings. “We got pulled through the crucible against our will and have been reshaped because of it,” he said. “For most of what has already been implemented, it has been a pretty good thing.”

Moreover, he discounted the prospects that the results of the 2012 presidential election or a Supreme Court decision striking down aspects of the ACA would deter the change. “Reform is not going to stop. It won’t go away.”

As those of you who have read my arguments here will know, I absolutely agree with this. The costs are out of control, the outcomes are not nearly as good as they should be and the astonishing inefficiency of the entire system contributes to the very high cost and the less than stellar outcomes. Once thing that Bertolini doesn’t talk about is the fact that large, established employers are quietly and actively looking for ways to get out of providing insurance so they can get off of the cost roller coaster.

Mark Unger over at Forbes talks about this admission from Bertolini as a sign that some form of single payer is on its way. Not soon, of course, and it will be a horrible fight to get there, but once the big insurers get that their business model is likely done for, it is time for the single payer policy types to swing into action. Because it won’t do to just create a new system that is as costly, inefficient and ineffective as the one we have. Reducing overall costs and making overall health outcomes clearly better has to be at the heart of any new single payer scheme.

If single-payer is in our future, whether on a state-by-state basis or a system operated by the federal government, it would be best to set it up before we are forced into it by failed private insurance companies. That means that devising a workable program with political support from all sides is far preferable to waking up one day to find that this is the only option available to us.

To do this, supporters of the single-payer model are going to have to offer up something more than their good intentions to both politicians and citizens who oppose this approach. Supporters are going to have to offer the solutions designed to control what are now out-of-control health care costs without putting patients in jeopardy of death due to rationing or causing folks undue waiting times to deal with a medical problem.

This is the long-term opportunity that I often argued for with the ACA. The ACA is not a long-term fix, but it can be the turning point towards getting closer to some form of single payer. And we’re close to a point where all of the stakeholders involved in this will be more than ready to do something different. It will be up to single payer advocates to put forth options that achieve cost control and better health outcomes because I have no doubt that insurance companies won’t just leave the field quietly.