Aetna CEO: Health Insurers Face Extinction

[one...two...tree 2,762]

It’s not often that you hear the leader of a Fortune 100 company publicly acknowledge the imminent demise of his venerable, profitable business model.

Yet, speaking at the HIMSS12 Conference in Las Vegas, Aetna CEO, Chairman and President Mark Bertolini, said a reckoning for the traditional health insurance model was at hand. “The system doesn’t work, it’s broke today” Bertolini told attendees. “The end of insurance companies, the way we’ve run the business in the past, is here.”

Bertolini said an amalgamation of regulatory, demographic and economic factors were driving this change. The Affordable Care Act in particular, with its ban on medical underwriting, has made the traditional health insurance business model untenable in the long term, he said. Nonetheless, he offered measured praise for the law, even citing the controversial medical loss ratio rules as having a smoothing effect on premium swings. “We got pulled through the crucible against our will and have been reshaped because of it,” he said. “For most of what has already been implemented, it has been a pretty good thing.”

Moreover, he discounted the prospect that the results of the 2012 presidential election or a Supreme Court decision striking down aspects of the ACA would deter the change. “Reform is not going to stop. It won’t go away.”

So what will the health insurers look like in the future? Bertolini offered a strong endorsement of the accountable health organization model, positioning health insurers as uniquely suited to usher in an era of coordinated care. “We need to move the system from underwriting risk to managing populations,” he said. “We want to have a different relationship with the providers, physicians and the hospitals we do business with.”

Technology is crucial to redefining this relationship, he said, noting that Aetna recently purchased health information exchange Medicity. Part of rationale behind the deal, he said was Medicity’s software development kit for mobile app creation. Bertolini said Aetna will give away the SDK to the public domain for free, hoping to spur a marketplace for healthcare-centric mobile apps.

Thus leveraging mobility, social and cloud technologies, he sees health insurers increasingly providing providers with the technical wherewithal to better serve patients and drive costs out of the system, likening the relationship to Intel’s strategy to support computer manufacturers rather than targeting consumers directly. Pondering the future of the health care exchanges, Bertolini foresees the brands of health systems superceding those of health insurers. “We want to leverage or technologies and capabilities to allow you to be the face in marketplace,” he said.

Indeed, Bertolini says this new arrangement makes great sense from the perspective of the customer. The lack of coordination inherent in the current system stems largely from the various stakeholders acting rationally in their own self-interest. “For the patient it’s a nightmare. Think of a hockey game where everybody has their own puck.”

A new business model for insurers predicated on partnering with providers coupled with skillful use of technology can turn the focus back on the customer, he said. “We can use technology to make it easier for the consumer. Convenience is the new word for quality.”

http://www.healthdatamanagement.com/news/HIMSS12-Aetna-CEO-insurers-face-extinction-44041-1.html?bcpg=2

[Obama 2012 1,714]

the health care system is only a nighmare if you actually expect a middle-man to work for you and then not make a buck while doing so.

Time and time again I've said it, health insurers are not the enemy. They are far from it. They're offering you a service to help you PAY for health care. "Help" is being a key word. When you overuse/abuse someone's help there are sometimes consequecnes.

At the same time we blame the insurance companies, actual health care costs go through the roof.

Health care and Insurance are two different industries. They are not as integrated as politicians like to make them out to be. It's one business working with another business just like all companies work with others to get products/prices at a negotiated rate. Nothing more and nothing less.

People get mad when they don't get what they want from their insurers, but they should be getting mad at the actual health care system being so expensive and then themselves for relying on someone else to pay for them.

[xebec 195]

It’s not often that you hear the leader of a Fortune 100 company publicly acknowledge the imminent demise of his venerable, profitable business model.

Yet, speaking at the HIMSS12 Conference in Las Vegas, Aetna CEO, Chairman and President Mark Bertolini, said a reckoning for the traditional health insurance model was at hand. “The system doesn’t work, it’s broke today” Bertolini told attendees. “The end of insurance companies, the way we’ve run the business in the past, is here.”

Bertolini said an amalgamation of regulatory, demographic and economic factors were driving this change. The Affordable Care Act in particular, with its ban on medical underwriting, has made the traditional health insurance business model untenable in the long term, he said. Nonetheless, he offered measured praise for the law, even citing the controversial medical loss ratio rules as having a smoothing effect on premium swings. “We got pulled through the crucible against our will and have been reshaped because of it,” he said. “For most of what has already been implemented, it has been a pretty good thing.”

Moreover, he discounted the prospect that the results of the 2012 presidential election or a Supreme Court decision striking down aspects of the ACA would deter the change. “Reform is not going to stop. It won’t go away.”

So what will the health insurers look like in the future? Bertolini offered a strong endorsement of the accountable health organization model, positioning health insurers as uniquely suited to usher in an era of coordinated care. “We need to move the system from underwriting risk to managing populations,” he said. “We want to have a different relationship with the providers, physicians and the hospitals we do business with.”

Technology is crucial to redefining this relationship, he said, noting that Aetna recently purchased health information exchange Medicity. Part of rationale behind the deal, he said was Medicity’s software development kit for mobile app creation. Bertolini said Aetna will give away the SDK to the public domain for free, hoping to spur a marketplace for healthcare-centric mobile apps.

Thus leveraging mobility, social and cloud technologies, he sees health insurers increasingly providing providers with the technical wherewithal to better serve patients and drive costs out of the system, likening the relationship to Intel’s strategy to support computer manufacturers rather than targeting consumers directly. Pondering the future of the health care exchanges, Bertolini foresees the brands of health systems superceding those of health insurers. “We want to leverage or technologies and capabilities to allow you to be the face in marketplace,” he said.

Indeed, Bertolini says this new arrangement makes great sense from the perspective of the customer. The lack of coordination inherent in the current system stems largely from the various stakeholders acting rationally in their own self-interest. “For the patient it’s a nightmare. Think of a hockey game where everybody has their own puck.”

A new business model for insurers predicated on partnering with providers coupled with skillful use of technology can turn the focus back on the customer, he said. “We can use technology to make it easier for the consumer. Convenience is the new word for quality.”

http://www.healthdatamanagement.com/news/HIMSS12-Aetna-CEO-insurers-face-extinction-44041-1.html?bcpg=2

Typical progressive spin. Of course it is a profitable industry. Profitability drives the free-market economy. But the profitability of health insurance is quite low compared to many other industries. Obama's misinformation has some staying power....I'll give him credit for that.

http://www.politifact.com/truth-o-meter/statements/2009/jul/23/barack-obama/health-insurance-company-turned-profit-not-rec/

http://1.bp.blogspot.com/_otfwl2zc6Qc/SoMLoWBKM4I/AAAAAAAAK4g/wKdZyg5LxQ0/s1600-h/profits.bmp

http://biz.yahoo.com/p/sum_qpmd.html

[Dakine10 5,452]

the health care system is only a nighmare if you actually expect a middle-man to work for you and then not make a buck while doing so.

Unfortunately, it's also a nightmare when the middleman laughs and tells you to GTFO.

[Obama 2012 1,714]

Unfortunately, it's also a nightmare when the middleman laughs and tells you to GTFO.

We shouldn't need that middle man to begin with.

Outside of medicaid/medicare for the elderly/very low income people, we shouldn't need "assistance" (which is what insurance provides) to pay for health care. Costs should not be where they are at all. There's a variety of factors that cause health care to be so high that need to be addressed, but everyone attacks the insurance companies because that's the easy way out at the end of the day, yet does nothing to solve the overall problem.

[Dakine10 5,452]

We shouldn't need that middle man to begin with.

Outside of medicaid/medicare for the elderly/very low income people, we shouldn't need "assistance" (which is what insurance provides) to pay for health care. Costs should not be where they are at all. There's a variety of factors that cause health care to be so high that need to be addressed, but everyone attacks the insurance companies because that's the easy way out at the end of the day, yet does nothing to solve the overall problem.

The whole system is absurd. If you have insurance a surgery costs lets say $2000, and you end up paying $200. If you don't have insurance, the same surgery costs $20000 and you end up paying $20000.

There's a bill here in Colorado that would limit hospital charges to cost only for uninsured patients with income less than 4x poverty level. Hospitals don't like that one. Anyone that's in the healthcare business to make money likes the system just the way it is. That says a lot.

[Gary and Alla 3,694]

Good news. The best way to get costs down would be the extinction of health insurance.

[Pooky 3,830]

Health insurance companies are like leeches, but without the health benefits.

The greatest crime of Obamacare is that it force feeds the leeches, when it could and should have eliminated them from their relationship with the primary level of healthcare entirely.

[one...two...tree 2,762]

Health insurance companies are like leeches, but without the health benefits.

The greatest crime of Obamacare is that it force feeds the leeches, when it could and should have eliminated them from their relationship with the primary level of healthcare entirely.

Mandatory insurance but with caps on profitability. That's why the CEO of Aetna is calling 'uncle.' The price caps will drive for-profit insurance companies out of business. An actual brilliant move by Obama if that is the end result, because it will keep the insurance companies focused on spending 95% of their revenue on actual health care.

Edited February 28, 2012 by Mister Fancypants

[Gary and Alla 3,694]

Mandatory insurance but with caps on profitability. That's why the CEO of Aetna is calling 'uncle.' The price caps will drive for-profit insurance companies out of business. An actual brilliant move by Obama if that is the end result, because it will keep the insurance companies focused on spending 95% of their revenue on actual health care.

Nothing about Obama care is brilliant. It will fail. This is why state after state is bailing on it. Our state came up with its own single payer plan.

You either go single payer or you eliminate insurance and just pay as you go and let the free market control prices. We have insurance now but I get better prices on my prescriptions through competitive pharmacy discount plans than I get from my co-pays, for example. When people can shop and actually get a benefit from shopping te market,prices will come down PLUS you eliminate 100% of the costs and profits of insurance companies from the system. The costs of medical procedures that are NOT coveredby insurance have increased far less than those that are coveredby insurance. Why? Two reasons. No need to feed the insurance company (we pay for the expenses and costs as well as the "profit") and competitive shopping for services.

Health insurance companies are parasites.

[Mr. Big Dog 10,747]

Mandatory insurance but with caps on profitability. That's why the CEO of Aetna is calling 'uncle.' The price caps will drive for-profit insurance companies out of business. An actual brilliant move by Obama if that is the end result, because it will keep the insurance companies focused on spending 95% of their revenue on actual health care.

1) It's 85% and, more importantly, 2) if the insurance industry needs to make x dollars in earnings and 15% of the revenue is all they're allowed to book as anything but actual health care cost then the way to bring up earnings is to contribute to driving up health care cost. Today, health care is a $2.5 trillion dollar industry. 15% of $2.5 trillion is $375 billion which they can spend on operating expenses and earnings. So, if they can manage to drive the cost of the health care system up to $3.5 trillion, then they are allowed to spend $525 billion on operating expenses and earnings. Most of that increase is going to earnings, of course. The added benefit is that they get 30+ million new customers. By law. You see, it solves nothing.

[Mr. Big Dog 10,747]

Nothing about Obama care is brilliant. It will fail. This is why state after state is bailing on it. Our state came up with its own single payer plan.

That's the one ray of light in the legislation. States are free to do their own as long as it meets set standards. This may actually be one of the components that makes this a success a decade or more down the road. I sure hope that Vermont's single payer system will be a huge success that other states will then adopt.

[one...two...tree 2,762]

1) It's 85% and, more importantly, 2) if the insurance industry needs to make x dollars in earnings and 15% of the revenue is all they're allowed to book as anything but actual health care cost then the way to bring up earnings is to contribute to driving up health care cost. Today, health care is a $2.5 trillion dollar industry. 15% of $2.5 trillion is $375 billion which they can spend on operating expenses and earnings. So, if they can manage to drive the cost of the health care system up to $3.5 trillion, then they are allowed to spend $525 billion on operating expenses and earnings. Most of that increase is going to earnings, of course. The added benefit is that they get 30+ million new customers. By law. You see, it solves nothing.

That doesn't seem probable without increasing the level of care for their customers which would be a good thing. I'm sure there will need to be price caps (maybe there is one) on specific medical procedures like with Medicare that prevent price gouging.

[Mr. Big Dog 10,747]

That doesn't seem probable without increasing the level of care for their customers which would be a good thing.

Seems quite probable to me seeing that the cost of care has gone up for decades w/o the level of care ever keeping pace.

[extrarius 1]

Frankly I'm not all that surprised. The health care system here (especially the health insurance companies) is quite corrupt. They really care about cutting costs rather than helping our the people they are covering, I went through a perfect example of this fighting with my current provider to remove my wife's pre-existing condition exclusion (which I did) because they didn't want to cover her chronic migraine syndrome treatment regiments even though she met all the HIPPA requirements for insurance coverage. The whole system IMHO needs a complete and utter overhaul.

Edited February 28, 2012 by extrarius