Going Beyond Insurance Reform


This week's question for the Washington Post Health Care Rx blog was:

Last week, President Obama admonished insurance company executives for excessive rate increases. He is taking aim at them again in his speech in Philadelphia right now. How much of our problem rests with insurance companies and how much is the result of other facets of the health-care system?

My response, Going Beyond Insurance Reform , is posted below.

In 2009, the United States spent an estimated $2.5 trillion on health care. That same year, the profits for the top five for-profit health insurance companies totaled around $10 billion, generally 3-4 percent of their revenues -- a fraction of total health-care costs. So, while insurance reform is important, fixing our health care system will clearly require more.

We need to think more broadly about redesigning today's health-care system to drive innovation, better value and improved outcomes to be able to increase access. Our current system is based on a fee-for-service model that primarily addresses acute care issues versus today's health concerns, which are dominated by chronic conditions. The CDC estimates that more than 75 percent of America's health-care costs stem from six chronic disease states. And the number of people with chronic diseases continues to rise. Today, about 133 million Americans (nearly half of all adults) live with at least one chronic illness- and most chronic diseases require a lifetime of ongoing care. As the population ages, we must evolve our health-care system to more effectively address the needs of chronic disease patients -- improving care and managing costs. Further, we have to engage consumers in managing their own health - providing tools and information to support informed choices and holding consumersmore accountable.

To support a redesigned health delivery system, we need the right types of insurance. Let's remember that insurance companies are designed to spread risk, but health insurance is unique because it's used for routine as well as catastrophic needs. People expect their health insurance to cover every doctor's visit, test and treatment, which is economically inefficient and establishes the wrong incentives for providers and consumers. People should pay for routine care and only tap into health insurance when they need to cover major, unpredictable issues.

Key to reforming health insurance is separating it from employment, which would guarantee that individuals would not lose their insurance even if they were to change or lose their jobs. Most importantly, it would encourage new innovation in the health insurance industry.

If people were responsible for paying for routine visits and procedures, they would demand greater transparency around the costs and effectiveness of their care, be more engaged in their health and consider more fully how their choices impact themselves and others. This would enable more innovation in insurance and health delivery and make health care more affordable for all.