P&T
Our
Other
Journal
MediMedia Managed Markets
Managed Care

 

Wendell Potter: Insurers Will Be Radically Different

MANAGED CARE April 2012. © MediMedia USA

Wendell Potter: Insurers Will Be Radically Different

Joseph Burns
Contributing Editor

For-profit insurers will evolve by developing lines of business beyond health insurance, predicts Wendell Potter, an author and former insurance company communications executive.

“I don’t see insurers going out of business,” says Potter, the author of Deadly Spin, An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans (Bloomsbury Press, 2010). “Instead, health insurers will be radically different and some will still be around. The smaller ones will be absorbed or they will consolidate and grow stronger.

“The for-profit companies need to evolve because the shareholders and Wall Street analysts will demand that they continue to show increased profit each quarter,” he explains. “That’s why they have to evolve and why they will cede some of the health insurance market for basic medical coverage to smaller not-for-profit companies or to Blue Cross plans.

“Investors and analysts will look very closely at the limits the Affordable Care Act imposed on the medical loss ratio (MLR), which means insurers can no longer do what they’ve done to make the profit margins they made in the past. Wall Street analysts will want them to focus their attention on more profitable areas of business.

“By law, public companies have to serve their shareholders first, and that obligation competes with their obligation to serve patients,” he says. “Therefore, insurers are changing their business model by narrowing the universe of customers they serve. You can’t keep doing that and continue to stay in business.”

In addition to limits on MLR, the ACA forces insurers to face increased competition in the exchanges.

Wall Street analysts will want [health plans] to focus their attention on more profitable areas of business.

“Insurers have never had to compete with other insurers on exchanges before,” Potter observes. “That’s why they’re beefing up their presence in the Medicare Advantage and Medicaid markets when they can. That’s also why they prefer to work with self-insured companies, and why they are leaving the individual and small business markets to the Blue Cross plans.”

One asset that health plans have that others need is data on their members, data that a variety of parties may find useful, Potter says. “The for-profit companies will diversify to become data companies,” he adds. “It will be interesting to see who they sell that data to because, in some cases, they will sell to competitors and to providers. Some insurers already market their data to others because they recognize that what they have has value for their corporate customers and for not-for-profit insurers.

“Watching these companies over the next few years will be interesting as they evolve to serve their shareholders and analysts,” he concludes. “And, by 2014, the changes they are making now will accelerate.”

Wendell Potter

Health Plan 2020

Perspectives:

Meetings

Pharmaceutical Pricing and Contracting Conference Philadelphia, PA September 22–23, 2014
Private Health Insurance Exchanges Conference Washington, D.C. October 7–8, 2014
National Healthcare Facility Management Summit Palm Beach, FL October 16–17, 2014
National Healthcare CFO Summit Las Vegas, NV October 19–21, 2014
National Healthcare CXO Summit Las Vegas, NV October 19–21, 2014
Innovative Member Engagement Operations For Health Plans Las Vegas, NV October 20–21, 2014
4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014