Earlier this week in the Fiscal Times article, Hospitals Plot the End of Insurance Companies, they described the “Kaiserification” of our health care system. Today I caught up with Michael McConnell’s answer to whether Hobby Lobby could avoid a substantial burden on its religious exercise by dropping health insurance and paying fines of $2,000 per employee? Here is what the Fiscal Times said about the Kaiserification of our health care system.
Dr. Ezekiel Emanuel, chairman of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and one of the architects of the Affordable Care Act, agreed, saying that we’re beginning to see what he called the “Kaiserification” of our health care system.
He was referring to the Kaiser Permanente health care consortium, which combines a health insurance company with subsidiary hospitals and medical practices to create a fully integrated health care delivery system. He noted that large insurer Wellpoint recently completed the acquisition of a health care company in California, apparently with an eye toward replicating the Kaiser model in some form.
Emanuel said we’re witnessing “the end of insurance companies as we know them” and that if they want to survive, they “will have to get into the business of providing care.”
He predicted that in the world of health care, “the wave of the future is integrated delivery systems ”“ integrating insurance with delivery function.”
I agree with Dr. Emanuel on this point. I argued in the past that a local health care plan would be best for me and wondered out loud why we are using a federal solution to an inherently local solution. Here is what I said in my post, Health Care Reform for the Forgotten Man.
My perfect health care plan is an individualized health care plan issued from my local hospital that includes my local doctor. The perfect plan for the business I work at is a defined contribution plan. If we combine both of these together we arrive at the conclusion that if health care is to evolve to a more perfect system then it will be primarily a local solution with possibly some state-wide or regional features.
As much as I like the “Kaiserification” solution there are a few problems with it for both local and nationwide companies like Hobby Lobby.
- How do you create and maintain adequate cost and quality competition in a region? Hospitals seem to be clueless about cost and quality control. Are health insurance companies a necessary evil till hospitals, government plans, and insurance companies can settle on one price for a service?
- How do you compensate doctors and hospitals in other states if the patient wants to use them? My nephew had a chronic problem that was not resolved until he went to a doctor in a different state who specialized in the diagnosis and correction of that problem. His surgery was out of network. A similar but different problem exists for people living in a tri-state area. I can get to a highly rated hospital in Kentucky faster than I can get to one in downtown Cincinnati.
- How do you manage health insurance benefits for a company with employees working nationwide? Hobby Lobby has about 561 stores and 21,000 employees.
- How important is the health insurance benefit to attracting and keeping employees?
- How disruptive would it be for a company to drop its health insurance benefit?
As Mr. McConnell pointed out the last two questions are important reasons for why Hobby Lobby, Walmart, Starbucks, and others will continue to offer a more attractive health insurance benefit to their employees than is offered via the exchange. Once again the conservative, go slow approach to reforming employer sponsored health insurance benefit continues to be more attractive to both employers and employees rather than the progressive, faster, less understood changes of the Affordable Care Act. The $2,000 penalty and “Kaiserification” of health care may be an appealing tradeoff for small companies with health care plans very similar to exchange plans. For large group plans the “Kaiserification” of health care is a confusing message to the existing employees and is becoming an unforeseen obstacle in hiring new employees. For large companies like Hobby Lobby their ability to hire directly affects their ability to grow. Justifiably these companies are proud of their existing health care plans and are probably getting upset that their existing and prospective employees are wondering who is telling the truth about health care. These are the people who were supposed to be able to keep their health care plans and be excluded from health care chaos! Unfortunately Dr. Emanuel’s talk of companies dropping health insurance as a good thing is just adding to the skepticism towards the Affordable Care Act. If there was any remaining good will in the public towards the Affordable Care Act, the polling says it is quickly fading. The obvious solution to the religious objection question is to allow the exchange to create a “Medicare Advantage-like” solution and let these large companies get back on track with the “go slow” approach to health care reform. Abortion benefits was not one of the big problems the Affordable Care Act was trying to fix. This would allow Hobby Lobby to offer a plan that complies with their religious beliefs and the government to offer a plan that complies with their religious beliefs. The solution is not pretty but does it matter when 27 parts of the ACA are postponed? As some point the judicial branch is going to get tired trying to fix the Affordable Care Act.
Once again I am reminded me of this old nursery rhyme.
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.[1]