Non-profit Health Insurance, mmmmmmm
Establishing health insurance providers as non-profit entities is an interesting concept in today’s healthcare system. What would happen if the multitude of health insurance companies switched status from for profit to a non-profit status? Putting away multi-million dollar compensation packages for industry executives and replacing them with premium dividends and improved coverage for members, could it really happen? Bringing CEO salaries down to match the rest of the world and increasing hospital and provider reimbursement rates, could that happen? Making the business of healthcare a little less business like and a little more patient focused, do we dare?
Rising costs associated with healthcare are the driving forces for many other issues that hospitals, providers, and patients face daily in obtaining the care they need. Insurance premiums are expensive for everyone – employees, employers, and families. Millions can’t even afford insurance. Reimbursement rates for hospitals and healthcare providers continue to be reduced and this fall some complications of care which increase hospitalization costs will not be reimbursed at all by both federal and private insurance companies. The end result is a continuing financial squeeze for healthcare organizations.
Industry leaders speak of high quality accessible healthcare. Concepts of organizational transparency and provider rating statistics are used to demonstrate quality so that healthcare consumers can make better choices. In an attempt to force hospitals to improve their care insurance companies have come out with the never lists – a list of iatrogenic complications of care that increase hospitalization costs for patients that insurers will not pay for anymore.
Clearly most hospitals are doing everything they can to mitigate errors, and preventable harm to patients. From an outsider’s perspective this may seem quite simple but the reality is that not all complications of care are easily avoidable. To really improve the quality of care across the country hospitals and providers need to have higher reimbursement rates. Improved reimbursements will enable better staffing, improved programs for care, and the acquisition of medical technology to facilitate care. Could reorganizing health insurance companies to a non-profit status as a way of cost reduction improve our care? What are your thoughts?
About the Author
Mike Pringle is the author of Healthcare Today where he offers commentary and insight regarding today’s healthcare issues. Additionally he provides regular commentary for Red Scrubs and editorial content for Future Healthcare. He has over 20 years of nursing experience working both domestically and internationally. Mike has a Bachelor’s Degree in Nursing and a Masters Degree in Public Administration with a Healthcare emphasis. He specializes in both Emergency and Critical Care Nursing. He currently works at Falmouth Hospital as a Shift Manager for the emergency department.
Peter responds:
Posted: April 24th, 2008 at 3:29 pm →
Non-profit does not mean non-wasteful; the history of BlueCross/BlueShield of New York proves this, where company executives held “conferences” in Aruba, the CEO needed daily helicopter transport to and from his home, or executives received large bonuses, et cetera. Non-profit simply means that at the end of a time period, no money can be left over between revenue and costs. Non-profits thus spend the extra money on unnecessary and wasteful items. For-profits take the extra money and give it back as dividends to stock holders most likely.
The trend in health care right now is in the opposite direction, to make non-profit insurance companies into for-profit entities, forgoing the tax benefits in favor of selecting out high-cost individuals from insurance and for raising capital through equity shares. Non-profit versus for-profit is a poor way to discuss methods for decreasing wasteful healthcare costs and instead the focus should be on underlying economic incentives.
Canada life insurance responds:
Posted: April 27th, 2008 at 6:54 am →
I definitely have to agree with Peter. I am dealing disability insurance in Canada, where is 70% of health expenses covered by government, so I am a bit informed about situation from inside. Really, word “non-profit” doesn’t mean anything - it’s just a matter of accounts. There is million ways, how to reward yourself (that’s why are those people doing it, they are not sisters of mercy!) and show no official profit…
Mike responds:
Posted: April 28th, 2008 at 9:12 am →
I agree that organizations can waste huge amounts with spending as Peter pointed out. My thought about the non-profit health insurance company was that instead of a traditional dividend to stock holders etc. monetary gains could be disbursed back to policy holders in the form of a rebate or improving reimbursement rates for hospitals. I still think paying CEOs $18 million dollars a year is excessive by most standards, as with Atena’s Ronald Williams. This was in the New York Times recently. Look on my blog for the post.
That being said, I have mentioned before several times that insurance is a means of payment and should not really be seen as a primary cost control measure. To do that would be a kin to putting the cart before the horse. Health insurance premiums etc are a byproduct of the inherent cost of healthcare itself which as we all know needs to be addressed. How is the question.
The other problem here is the whole issue with market share, competition, investor interests, and a host of other issues effecting the business side healthcare. Perhaps the verbiage of non-profit that I used was incorrect, but the stock holders in healthcare I think are the patients not the share holders of companies.
Thanks for your responses.
Mike M responds:
Posted: May 13th, 2008 at 11:20 pm →
I am not sure whether this is still an open discussion but it is an incredibly important issue. I strongly agree with Mr Pringle’s comments For profit insurance is a part of the problem, a very big part. Whatever the excesses of poorly regulated not for profit organizations, they are far exceeded by the Wall Street driven economics of United Health, Aetna etc.
Switzerland mandates health insurance ownership for all of its citizens. The insurance industry is not for profit and per capita costs health care are 35% less than in the US.(about 8k vs 12k per citizen) Coincidentally, the profit for the typical health insurance company over the past 10 years is 30%.
From my perspective as a former military surgeon now in private practice for the past 5 years, there are 4 basic issues than can be addressed to improve access and decrease costs.
1. Revert to non profit status for insurers
a. Insurance companies do not play by the same rules as other entities in the market place
b. Collusion and price controls are defacto
c. Insurers unless coerced mimic medicare not market place
d. Profits go to decreasing premiums and fairly compensating providers/hospitals
2. use the purchasing power of government to negotiate the cost of drugs –reverse the Medicare part D debacle
a. already using such power to control MD and hospital reimbursement
3. dis-incentivize excessive testing and elaborate therapies by restricting physician ownership of ancillaries (PT and MRI etc)
4. TORT reform