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Health Insurers to Disintermediate

Summary: A very surprising and hugely important announcement: US health insurers have decided to “disintermediate” – step back from their traditional position between purchasers of health care (e.g., policyholders) and providers of health care (e.g., doctors and hospitals). The implications of this change are far-reaching.

Health Insurer Trade Association Announces Disintermediation
USA Wire Service
April 1, 2022
By Ziua Pācālelilor

Today the trade group America’s Health Insurance Plans, known as AHIP, announced that its members – scores of health insurers – voted to “disintermediate”. In a press release, AHIP explained that “disintermediation” means removing themselves from playing an intermediary role between insurance purchasers and healthcare providers, and between patients and clinical care.

The insurance companies represented by AHIP voted unanimously at the annual conference to make this drastic change in their business model. During the meeting, which was off limits to the press, one insurance CEO reportedly said, “It’s about time that we place efficiency and medical care over bureaucracy and profits. I for one am quite set financially, and would like to make this socially responsible action my swan song.”

The decision was completely unexpected. Health policy analysts expressed shock and confusion. One asked, stuttering, “But then what’s their purpose for existence, if not intermediation?”

A representative of the federal Center for Medicare and Medicaid Services, or CMS, said, “Well, that’s quite a course change. Seems like we’ll need to reinstate traditional Medicare and Medicaid, paying doctors and hospitals directly.”

Former insurance company executive and whistleblower, now a leading advocate for single payer universal health care, Wendell Potter said, “What? Holy shit! Really? This is transformative. Kudos to AHIP and their members. Finally, they’ve seen the light.” Mr. Potter popularized the term “disintermediation” in 2011, soon after leaving Cigna Insurance Company. At the time, he said it was the greatest fear of health insurers.

Today AHIP’s membership vigorously embraced that fear, and apparently conquered it.

Comment by: Jim Kahn

Whoa? For real? Health insurers voluntarily throwing in the towel on their half-century role in financing – and influencing – US health care.

The motivations of AHIP and its members are pure speculation. By adopting this position, they are abandoning their highly lucrative business model. Perhaps they have decided that the profit-taking cannot continue indefinitely, and this is a good time to get out. Perhaps, if we believe the quoted CEO, some had a change of heart regarding the purpose of health care financing – to pay for care and improve health, rather than bring giant financial returns to shareholders.

We can now look forward to settling on the details of the successor financing system – efficient, equitable, and health-maximizing single payer.

Let’s also remove corporate intermediaries on the provider side.

Alas, were it so. Today is, I remind our dear HJM readers, April Fool’s Day.

Keep working to make it real. With single payer, and community control.

One reply on “Health Insurers to Disintermediate”

Insurance and private equity firms have been buying provider groups and this trend accelerated during the pandemic when physician groups’ cash flow decreased as patients deferred care. The CMS’s ACO REACH program allows insurance companies, private equity firms, including venture capitalists to form REACH ACOs. So, disintermediating might mean complete vertical integration. Will the insurers become the providers hence no intermediaries? Don’t celebrate yet.

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