An interesting opinion piece in the New York Times predicts that a little known provision of the health care reform act will mean that American health insurance companies will go the way of the dinosaurs by the year 2020.
The provision in question sets up Accountable Care Organizations (ACOs), which are paid not for preforming procedures and tests like our current insurance reimbursed doctors and hospitals, but for keeping patients healthy.
It sounds like a good idea. In fact, such a good idea that it already exists in Health Maintenance Organizations (HMOs). Aware of this, the article devotes a paragraph to explaining how ACOs are not the same thing as HMOs.
I want to believe, but I’m not sure.
It isn’t that I disagree with the article’s basic premise — that the health insurance industry is already largely superfluous. In fact, it is hardly providing insurance at all. Sixty percent of people with employer-provided health insurance work for companies that are self-insured, where the company assumes the risk of providing the insurance part of the equation. In this case, which is most of the time, health insurance companies are acting as glorified billing claim processors. And that doesn’t even include all the people who are on Medicare or Medicaid.
For individuals and small business, health insurance companies do actually assume the risk, but again they are not acting as providers of true insurance where risks are spread out evenly over a population since they cherry-pick healthy people to insure and exclude unhealthy people from coverage.
And they aren’t even very good at processing health care claims. They are not only expensive themselves, but they increase costs for doctors, hospitals, patients, and also often stand in the way of treating people for simple health problems that later become expensive problems. No wonder our health care system is so expensive and has such poor results.
So, will ACOs actually solve this problem? Or will they fall prey to the same issues that plagued HMOs?