During the recent healthcare reform debate, all private health insurers were being vilified by some federal officials as unaccountable and greedy enterprises, without recognition of ownership, mission and performance differences—especially between not-for-profit and for-profit health insurers.
Unfortunately, the erroneous and unethical vilification of not-for-profit health insurers is not yet over, judging by some very recent statements from Congress and the administration:
- On Sept. 20, Senate Finance Committee Chairman Max Baucus (D-Mont.) publicly chastised private health insurers for “egregious abuses ” and stated that “it was “unfathomable to me that while healthcare companies continue to post record profits they would think to raise premiums.”
- On Sept. 10, Rep. Pete Stark (D-Calif.), chairman of the Ways and Means Health Subcommittee, challenged health insurers to “show how they intended to share their billions more in profits next year (based on second-quarter earnings reports) with policyholders.” Why didn't he note that data he used to justify this challenge were the profits and CEO pay of the six-largest for-profit health insurers?
- On Sept. 9, HHS Secretary Kathleen Sebelius warned, “We will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.” She demanded that private insurers “stop misinformation and scare tactics.” Isn't the pot calling the kettle black here? A recent Government Accountability Office study predicts that reductions in funding for Medicare Advantage plans under the reform law could cause “significant increases” in premiums.
Indiscriminate vilification of not-for-profit health plans is groundless, outrageous and galling. It deceives the general public and, most important, it is counterproductive to reforming our healthcare financing and delivery systems. Let me set the record straight:
- More than 60% of private health insurers in the U.S. are not-for-profit.
- These not-for-profit plans are owned by their communities or by their members—not private investors—and their boards are composed of leaders from the communities they serve.
- Last year, the average operating margin for all not-for-profit Blue Cross and Blue Shield plans was only 2.5%. Any earnings that not-for-profit health insurers make are kept in reserves to protect their members and/or reinvested in programs and activities to better serve their members and their broader communities.
- In terms of quality, 100% of the top 10 nationally ranked health insurers for Medicare and Medicaid are not-for-profit and 80% of the top 10 for commercial business are not-for-profit plans, even though they were far less than half of all the plans reporting. Not-for-profit health insurers also dominate the top 20 list, and have done so for all five years that these rankings have been issued by the National Committee for Quality Assurance.
- In terms of member satisfaction, about 75% of all the plans ranked No. 1 in their regions or ranked “among the best” in their regions are not-for-profit. Not-for-profit insurers have dominated these rankings for all four years that J.D. Power and Associates has done them.
- Not-for-profit health insurers have been found to spend 60% more of their budgets on community-service programs and activities, 100% more on donations to their communities and 100% more on medical research, and are 50% more likely to conduct community healthcare needs assessments.
- Research also has shown that not-for-profit health insurers are 70% more likely to maintain stable long-term relationships in Medicaid and 300% more likely to maintain stable long-term relationships in the Medicare program.
The far left favors government solutions over the free market, and the far right believes the opposite. And even many moderates on both sides have failed to acknowledge the third critical sector in our society—the not-for-profit sector, which has historically played, and continues to play, a vital role in financing and delivering healthcare in the U.S.
As one former CEO of a prominent not-for-profit health plan in New York put it: “Nonprofit enterprises are extraordinary organizations, accomplishing both what business will not do because the profit potential is lacking and what society does not want government to do because it doesn't think government will do it well.”
Many not-for-profit health insurers also are exercising leadership in local healthcare reforms—partnering with healthcare providers and other stakeholders in the communities they serve in coalitions, medical home and/or accountable care organization experiments, new incentive payment arrangements, and other efforts to improve patient safety and quality, to reduce unnecessary administrative costs and otherwise eliminate waste and to promote health and otherwise prevent illness.
The good news is that recently appointed CMS Administrator Donald Berwick also is ready to move forward and be a partner in such efforts. In his first major speech since being appointed, he urged insurers—along with employers, providers and communities—to join together in advancing health reform goals. He is quoted as saying, “The successful redesign of healthcare will be a community by community task … and it will be the local communities that have the knowledge and the skill to define what is locally right.”
Judging by these words and knowing that he comes from a state served by not-for-profit health insurers, Berwick appears to “get it.” Let's hope everyone else will too.
Bruce McPherson is president and CEO of the Alliance for Advancing Nonprofit Health Care in Washington.
