Why Keep Insurance Companies?

WHY KEEP INSURANCE COMPANIES?….I detect a bit of skepticism, even cynicism, about the role of insurance companies in the Universal Healthcare Voucher Plan. There are some pragmatic reasons related to politics for including them in the UHV plan, but these are relatively minor. There are important reasons to maintain delivery systems.

First, you fail to mention that in many countries with universal health coverage ? such as Germany ? there are intermediaries that are like health plans. In Germany they are called Sickness Funds. So the British and Canadian models are not the only types. Furthermore, the British are moving to create risk bearing entities that get flat fees to coordinate and provide coverge to people. Hospital trusts and such. In addition, many countries, such as Canada, find the system of fee-for-service without a coordinating body like a health plan to be bad, not good!

Second, so why have these health plans? They can integrate care more efficiently than a government which might cover 250 million people. Integration of care ? making sure physicians use the most cost-efficient drugs, making sure care is delivered efficiently in the cheapest setting, evaluating the costs and benefits of interventions, coordinating outpatient with inpatient care and nursing home care, etc. are functions that cannot be achieved by fee-for-service to doctors or government. Here health plans are a huge advantage in the delivery of care.

Third, it is possible to create financial incentives for the health plans to do this well in ways it is much harder to do with physicians. By providing a fixed payment for care, health plans have an incentive to provide care efficiently. Physicians care for too few patients for this to work ? and they do not have the resources to develop systems for evaluating where care is best delivered. Indeed, that there are so many individual physicians or small practices is a major reason the adoption of information technology is so bad in medicine. Big organizations ? but not too big that they are dealing with tens of millions of people ? have the incentive, and size to use IT effectively to make care better.