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Potter writes: "I've often said that the Affordable Care Act is the end of the beginning of reform. Starting October 1, 2014, that law will signify the beginning of the end of the health insurance industry as we know it."

Are we on the path to single payer health care? (photo: Occupy Wall Street)
Are we on the path to single payer health care? (photo: Occupy Wall Street)

Beginning of the End for Major Health Insurers

By Wendell Potter, OpenMike

05 October 13


've often said that the Affordable Care Act is the end of the beginning of reform. Starting October 1, 2014, that law will signify the beginning of the end of the health insurance industry as we know it.

As I've noted previously, my former CEO at Cigna said at a leadership retreat that what kept him up at night was the fear that big health insurance corporations might someday be viewed as unnecessary middlemen, that their "value proposition" would come under scrutiny and found to be wanting. That insurance companies would, to use his term, be disintermediated.

That day has arrived.

Most of the attention this week will be focused on the glitches that will inevitably occur when the switch is flipped and the long-awaited health insurance marketplaces (also called exchanges) finally go live.

Yes, there will be technological snafus, just as there will be some people upset to find that the relatively cheap policies they have now will be unavailable next year because they don't meet the Affordable Care Act's standards. As of January 1, 2014, the law outlaws policies pretty much guaranteeing that people will be underinsured if they get sick or injured - underinsured because those policies have inadequate benefits and outrageously high deductibles.

So expect to hear plenty of squawking, especially from those who have made a career out of opposing "Obamacare." But before long, the snafus will be resolved and people will realize that the newly available coverage in the marketplaces will provide better protection and actually cost them less after the tax credits and subsidies are factored in.

One of the things apparent right off the bat is that some of the best deals will be offered by nonprofit health insurers, including the brand new co-op plans that will be available in about half the states. These plans will be lean and mean. They won't have the enormous overhead costs of the big for-profit insurance corporations that I used to work for, and they won't have to charge extra for coverage just to satisfy the profit demands of shareholders. They won't have shareholders.

If you're wondering why Aetna, Cigna, Humana and UnitedHealth Group, four of the biggest for-profits, are not planning to participate in many of the marketplaces, it's because they know they cannot be competitive and still satisfy the profit expectations of their shareholders.

Before long both Wall Street and Main Street will catch on to the idea that the big for-profits are bloated Goliaths that can and will be taken down by the new Davids of the insurance world. The value proposition held out by the bigs for years - that their armies of underwriters, marketers and "medical management" specialists are essential - will be blown to smithereens.

The bigs have to know this, and it explains why we are seeing some of their desperation tactics. Like the letter Aetna is sending to some of its policyholders encouraging them to renew early this year so they can avoid the "big changes" that are on the way.

"New coverage requirements, additional benefits, and many new insurance plans will leave many people with questions," Aetna's letter reads. "You can do something right now that could help you save on your individual insurance premiums for next year. It's a one-time opportunity available right now."

Aetna executives know, of course, that most Americans are not yet aware that they might be able to get much better deals on coverage in the new marketplaces. As you can imagine, Aetna's letter makes no mention of those marketplaces.

The real reason the bigs are engaging in such tactics is to not to protect their policyholders from the possibility of higher premiums - or financial ruin if they get sick - but to protect their profit margins.

In addition to the new state marketplaces, private exchanges are springing up and attracting the attention of big employers that in the past have had no alternative but to do business with the large insurers. Now benefits consulting firms like Aon Hewitt are setting up their own private exchanges, which will force the big insurers to price their products more competitively. That, too, will lead to shrinking profit margins.

And as The New York Times reported last Friday, companies like GE are working directly with hospitals and physician groups to reduce costs and improve the quality of care for their workers instead of turning that responsibility over to insurance companies.

These are sea changes that will shift power away from big insurance companies, and thus erode the profits they make on both their individual and corporate books of business. It is just a matter of time before Wall Street recognizes that disintermediation has finally arrived and forces these companies to move more rapidly into other, more profitable lines of business, like data management. your social media marketing partner


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+54 # stanhode 2013-10-05 20:37
New co-ops? Well, please post a list of every one with website links and related information.

It would make the most sense if the admin co-ops "cooperate" very closely with the care-giving groups, pharmaceutical groups, and all other "health-care" entities. Then, they would need to propagate and cover essentially everywhere. It seems like a huge order that would require federal backing. Might the ACA just prolong corporate abuse while avoiding to create a real health-care system (Medicare for All, of course) 60+ years after the best systems were developed? Isn't that the purpose of the ACA, and doesn't it just set Medicare for All back by decades?

Would it be quicker to instate Medicare for All, outright, than to dabble with a slow transformation through byzantine rules into a new half-assed system for corporate profit?
+32 # Regina 2013-10-05 23:43
With our super-colossal industrial vultures, single payer (as it exists in all "civilized" countries) is what couldn't get off the ground in prior attempts. Of course we need "Medicare for all" -- but our bought-and-paid -for Congress will have to be dragged into the 22nd century, at the rate our history has shown us.
+11 # reiverpacific 2013-10-06 10:39
Quoting Regina:
With our super-colossal industrial vultures, single payer (as it exists in all "civilized" countries) is what couldn't get off the ground in prior attempts. Of course we need "Medicare for all" -- but our bought-and-paid-for Congress will have to be dragged into the 22nd century, at the rate our history has shown us.

Hell, that crowd of lazy, obstructionist, good-for-nothin g, medievalist Congressional finks are trying to get us all back to the 17th century!
Medicare itself is far from perfect with it's deductibles and layered coverage starting with Part B premiums -ever increasing- coming out of Social Security and no dental coverage. Single-payer covers everything.
I just found out that I can now get help to pay for Part B premiums in Oregon when the ACA kicks in and my wife and i are already on a sliding-scale prescription drug coverage at our local sliding-scale pharmacy, so that'll help to stretch our S.S. payments a bit farther, with my recently approved small pension from the UK, while we work hard to put our serious illness-bankrup tcy and recession-wreck ed business together.
I'm just glad that we live in Oregon and not the South which, almost to a state, has rejected participation in the ACA; I guess they want to revert to slavery. It really is a different country down there!
Maybe we'll see the big insurance office complexes in Hartford Connecticut turned into local sliding-scale or better still, free clinics yet!
+22 # ER444 2013-10-06 01:51
Of course it would be easier, but you are forgetting who Obama is having to fight with to get the country even slowly moving in the right direction. Now the Rethuglicans should give up and get back to work. Obama Care is a done deal! Millions have been signing up for affordable health care in the last week. If you take that away from them just as they are seeing light at the end of the tunnel expect a riot.
+3 # MainStreetMentor 2013-10-08 10:06
“The Beginning of the End for Major Health Insurers” is a title for not only an article, but the announcement for an action I have been looking forward to for some time. The greedy profiteers of the health care industry had sufficient time to draw back their excessive pricing, and remove the impediments to health care for EVERY citizen. But their penchant for Greed was too strong. Their industry, the one that’s helped fund the campaigns of many of the RepubTeacans in the House, is indeed going to wither and die as the cancer of corruption and Greed finally comes full circle and eats itself. I’m sorry for the honest medical worker caught up in the industry’s game of avarice, and I hope there are jobs for them within the ACA world. I will say this: If and when I learn of a health care executive or board member who is forced out of work ever applies for a position within the ACA world of health care, I will move heaven and earth to assure they are NEVER admitted into the world of health care that actually cares for the patient, not the dollar bill they would have represented under the “major health care” industry.
+28 # gotsmarter 2013-10-05 22:13
Wendell Potter, you got my attention on TV when you told about your former job in the insurance industry and explained so clearly what should happen. During the big healthcare debates, my husband and I thought you were the best voice of reason. Thank you for all you did to help Obamacare become the law of the land. We will all be better for it, and you must be proud of your work for all of us.
+15 # brux 2013-10-05 22:25
I want to hope for the best, but the insurance companies and those who run them for their own profit have had years to get a bead on this and figure out either how to turn it to their advantage.

I've thought all along this was basically a dodge to avoid Medicare expansion, universal single payer healthcare, or the public option. They just keep stringing the American people along for decades now behind more and more civilized countries to buttress a society and economy of corruption, and spending billions of disinformation and security to keep people down - weak, poor and powerless.

The first step is this public mandate, which I still have some doubts about ... it's the same old debt game of people in debt to the company store ... and it's not the government - it's private entities we are dominated by ... in exchange for health care that who knows what it is going to be?
+9 # Eldon J. Bloedorn 2013-10-05 22:54
One great change. A CEO will no longer be laughing his or her way to the bank while the herse delivers another body to a grave.
+10 # Jim Young 2013-10-06 00:50
It is a step in the right direction, and it seems health care will have to step up from offering near worthless products at high prices to adequate (and more easily comparable products). That alone will open the eyes of many to what they were overpaying for. Once their eyes are opened, almost all should be able to see where we could be if we looked at healthcare as an investment in people, not an opportunity for investors to maximize profits.
+9 # CarolYost 2013-10-06 00:54
I'm afraid I don't understand all that's said here. I had thought people who are already insured would be allowed to keep that insurance. I also don't understand how a private exchange would work.

Of course single-payer would be better on all fronts. One thing I gather from what Wendell Potter, celebrated insurance whistleblower, is that we will in fact wind up with single-payer under the ACA, because it won't protect the insurance companies' profits the way it is supposed to. I agree with the other commenter that it was set up to protect the for-profit insurers. It just will not work. We'll wind up with single-payer in a roundabout way. Yeah, it would be simpler to get single-payer now, but Potter is being very encouraging indeed.
+4 # pres 2013-10-06 04:36
Yes stanhode, but they could not get it passed if they did an "Medicare for All".
Any "Insurance" of medical treatment should be eliminated.. (making a profit off of illness is a bad objective). It only needs to be a 'medical service' -like is provided by VA. Of course, my friends father, who was a neurosurgeon, would not want to have his "more than a million dollars a year" pay reduced by any amount. (and that was over two decades ago!)
+19 # Wolfchen 2013-10-06 05:22
Medicare...a single payer system that already exists. Extending it to universal coverage via a Medicare For All system would most definitely be the most enlightened and cost effective health care system that is within our reach.

Such a system is a win-win for all. Not only would it provide more cost effective medical care, but it would also relieve employers from having to be directly involved in providing such care. The only losers would be the corrupted politicians who profit from the current system of antiquated health care delivery.
+13 # Polar Bear 2013-10-06 05:57
I am so glad Amy Goodman has had Wendall Potter on her show so I know how good he is
+13 # Gordon Berry 2013-10-06 06:26
I certainly hope Wendell is right - that this very thin end of the "affordable health care for all" WEDGE gets thicker very quickly...
As "Stanhode" says - the more publicity about it, the faster it will grow.
+16 # walt 2013-10-06 07:02
The time is long overdue for taking health care from the profit-making sector as we have had it for decades.

Health care should be seen and a right of citizenship and not a source of profit for corporations and stockholders.

Seeing fellow Americans die or remain sick because they cannot afford medical care should be proof enough, not to mention people declaring bankruptcy due to medical bills.

This is the beginning of seriously needed change and we might add to it the need for government to set limits on medical and pharmaceutical costs as other civilized nations do.

Obamacare is not perfect, but it is a beginning and can be modified later to meet the needs of citizens, not the corporate world.
+6 # Nell H 2013-10-06 10:13
People need to know that ONLY insurance bought on the exchanges gives them subsidies and/or tax credits.

If you buy a policy that is not offered on your exchange, you can't get federal subsidies and/or tax credits.
+9 # reiverpacific 2013-10-06 10:25
I worry that the big corporate drug and insurance companies and their lobbyists + the corporate press will work overtime to destabilize ACA.
The MAJOR over-riding premise -and I hope that becomes increasingly obvious if and as ACA catches on- is that the term "insurance" has no place in a basic human right which needs to embrace everybody of whatever social status and makes the whole thing anti-social, like a kind of elite country club, or a buy-in for a few rounds of Texas Hold'em for those who can afford to pay-to-play their lottery game.
I mean, I don't care how fit you are or how organic, holistic and herbal-healing your lifestyle is, you ARE goin' to get sick and old; we are a fleshy and fallible species (as a personal example, I nearly croaked with a burst appendix when I was 21, super-fit, a former Olympic trialist in swimming and water-polo, a 2-handicap golfer and an active rugby player: fortunately for me it happened in Scotland and not here). And some are just born into disadvantage.
The ACA might even, in a subtle way, help blur the heavily-drawn boundaries of the class war as everyone is given the chance at "Life, liberty and the pursuit of happiness"; it's hard to feel free when you are afraid to go the doctor, dentist or any other healer -until you are vacuumed up into the ER, where they really have you on their books and the debt-collectors start their harassment tactics and bankruptcy follows (I speak from experience here -and that was WITH insurance).
+13 # JoeBob 2013-10-06 11:22
Picture getting a phone call from a doc who tells you that the cyst they biopsied is cancerous and has likely spread. Now make believe the victim is your kid, not you. Immediately, you would seek medical solutions. Now picture your emotional state when u get a letter from your insurer who informs you that because the kid had a benign cyst 10 years ago on her foot, you will be denied benefits for her cancer. Despite on time payments over 20 years to the insurer, you don't have coverage and you don't have the $$ to pay for your kid's care. Slowly, you watch your kid die knowing that your kid could be saved. What Ted Cruz and the other miscreants don't get, is this story is real and happens every day to our fellow Americans. ACA is far from perfect, but the removal of the insurance company thieves is a major step forward. The fact that your kid cannot be denied coverage will be the difference between life and death. Ted Cruz, walk in my shoes before you try to dismantle ACA.
-4 # GDC707 2013-10-06 23:47
"One of the things apparent right off the bat is that some of the best deals will be offered by nonprofit health insurers, including the brand new co-op plans that will be available in about half the states. These plans will be lean and mean. They won't have the enormous overhead costs of the big for-profit insurance corporations that I used to work for, and they won't have to charge extra for coverage just to satisfy the profit demands of shareholders. They won't have shareholders."

Will someone please explain to me what Potter is talking about here? I have been following this issue quite closely for the last few years and I don't recall any mention, anywhere of this.
+2 # Jim Young 2013-10-07 11:58
Some co-ops are "owned" by all the members so they get all of what could be profits in the best services they can get for what they pay in, nothing goes out to monetarily profit motivated intermediaries since they are "disintermediat ed" (my new favorite word). Some allow outsiders to benefit from the mutual benefits of organizations Ben Franklin promoted (deriving the best mutual benefits instead of profiteering by a few). Such acceptance of outsiders buying in, could bring in extra funds to improve the price/benefit ratio even more, but ran some risk of outsiders capturing the management, reducing the number of owners. Medicare Advantage Plans, they sounded great, supposedly saving 5% of the Medicare costs (the first year only, more as it expanded) while providing better choices (through private profit and nominal non-profit insurance “intermediaries ”) for those who wanted some choice. The problem was they not only didn't save the 5% the first year, they never saved a dime and ended up costing 20% more than projected, 15% above staying the same cost).
This at least resets the starting point, before they try more clever ways to "reintermediate " their way back in as profitable "piratized" middlemen.
Let's not blow this new opportunity to make the trend better, and watch the really smart (or at least clever players) from recapturing their positions when people again quit paying as much attention.
+1 # Ja-Roz 2013-10-07 19:15
This is the real reason why the GOP is so adament-- we have been hostage to Big Pharma and the insurance companies for years-- that is why Obomacare, whatever it may lack initially must go on-- we may never get the chance again to get universal health coverage.

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