Take profit out of health insurance to cut costs

I appreciated the editorial in the Northern Colorado Business Report (“Higher health premiums? Let’s find the cure,” Feb. 7-20). The topic is very important. However, while debating the Affordable Care Act (Obamacare) and the health-insurance exchange may be mildly productive, it is mostly rearranging the deck chairs on the Titanic in terms of really addressing the high cost of American health care.

The elephant in the room is for-profit insurance provided by numerous companies. It is the biggest single obstacle to developing a true health care “system” to replace the current mixture of poorly coordinated pieces that we call the American health care system.  For-profit insurance is the primary dysfunctional foundation piece in this so-called system. The New York Times series “Pay ‘Til It Hurts” by Dr. Elizabeth Rosenthal is very good reading. The first of this yearlong series is dated June 2, 2013 – or look at the special report by Time magazine on March 4, 2013.

We need to clearly separate the question of who provides insurance from who provides medical care. Competition in the delivery of medical care, especially if true free-market conditions are allowed to be in place, is excellent. We can continue to have our doctor of choice from a for-profit company, not-for-profit entity or governmental agency.

For-profit health insurance provides little or no value in the process of providing medical care. It puts the financial incentives in the wrong place. Multiple health-insurance options provide complexity and cost but virtually no added value for businesses or families. Approximately 30 percent of all medical spending in the United States is wasted money, according to a 2012 Institute of Medicine report. A major portion of the waste is attributable to the complexity, inefficiency and conflicting motivations in the for-profit insurance industry.

It is important to not view this as an attack on the many well-intended people working for health-insurance companies. A for-profit health insurance system is the problem, not the people. (See the book “Deadly Spin” by Wendell Potter, former senior vice president at CIGNA health insurance.

Surely business and government leaders understand this. Or do they? How much more pain are businesses prepared to absorb before dealing with the elephant in the room. Every other developed country has recognized that health-care insurance needs to be universal and nonprofit if you want a “system” with the incentives for proper behavior and pricing in the right place.  Profit in the delivery of medical care is fine, but not for insurance.

True health-care reform and cost reduction only will happen through experimentation and innovation at the state level. Section 1332 of the ACA, “Waiver for State Innovation,” allows states to opt out of Obamacare in 2017 under certain parameters. Several states already are exploring this option.

What should business and governmental leaders do? Work together to find an alternative to Obamacare in advance of 2017. They can start by reviewing the proposal prepared by Co-operate Colorado. My initial reaction to their plan is very positive. Additional review and debate of the Co-operate Colorado plan is needed to determine if it is a good solution to reducing the pain being felt by Colorado businesses and families and if it is ready to be sent to Colorado voters.

Rich Shannon is a Fort Collins resident and member of the Northern Colorado Business Report’s editorial board.