Tuesday, July 28, 2015

Will reforming insurance fix the U.S. health-care system?

The latest salvo as Washington presses forward on health care paints insurers as responsible for everything that's wrong the American way.

Will reforming insurance fix the U.S. health-care system?


There is no bigger issue for Philadelphia than how Washington changes the nation’s health-care system.

While most would say that’s obvious because we all get sick sometime, I look at it from the sprawl of health-care employers in the region. One study last year estimated that one in six jobs here feeds off that sector.

Some of our biggest employers are hospitals and pharmaceutical companies. Independence Blue Cross and Cigna Corp. are two of the nation’s largest health insurers and they’re based here. The region is home to four medical schools as well as schools for nursing and other health professions.

Thus, if Congress passes health-care reform by the end of March and it gets signed by President Obama, something will change in the medical ecosystem here.

Though I’m not sure what is in or out of the bill right now, all indications are it will be bad for the health insurers. The soundbites make it seem as if insurers are responsible for all that is bad about our health-care system.

Think of the insurance company as the middle man of the health-care system. “Eliminate the middle man” is the rallying cry of anyone who wants to make something better, cheaper or more efficient. However, there’s a body of research that shows that middle men (and women) exist because of the value they provide in the markets they serve.

To me, the middle-man role of insurers is “bad cop” in a health-care system on which the United States spent $2.3 trillion in 2008. Insurers haggle with hospitals, drug companies and doctors over the costs of their services and products.

Without some force strong enough to demand lower prices, how will health care become more affordable? After all, the U.S. isn’t willing to engage in price controls.

What’s unfortunate is that cost control isn’t even part of the discussion. It’s an understandable political choice. A dollar spent on health care is a dollar of income for someone working in one of the few sectors that continued to grow during the recession.

Thanks to some egregious premium hikes by some insurers, President Obama and congressional Democrats are easily making the case that the only members of the medical-industrial complex that should lose some of those dollars are insurers.

Inquirer Columnist
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About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
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