Let’s Stop the Ridiculous Vilification of Nonprofit Health Insurers and Move Forward with Effective Reforms
By Bruce McPherson
During the recent health care reform debates, 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 nonprofit and for-profit health insurers.
Unfortunately, the erroneous and unethical vilification of nonprofit health insurers is not yet over, judging by some very recent public statements from the Congress and the Administration:
· On September 20, Senate Finance Committee Chairman Max Baucus (D-MT) publicly chastised private health insurers for “egregious abuses” and stated that “it was “unfathomable to me that while health care companies continue to post record profits they would think to raise premiums...”
· On September 10, Congressman Pete Stark (D-CA), 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 September 9, Health and Human Services 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 GAO study predicts that reductions in funding for Medicare Advantage plans under the reform law could cause “significant increases” in premiums.
Indiscriminate vilification of nonprofit health plans is groundless, outrageous and galling. It deceives the general public and most importantly, it is counter-productive to reforming our health care financing and delivery systems. Let me set the record straight:
· Over 60% of private health insurers in the U.S. are nonprofit.
· These nonprofit plans are owned by their communities or by their members—not private investors--and their boards are comprised of leaders from the communities they serve.
· Last year the average operating margin for all nonprofit Blue Cross and Blue Shield plans was only 2.5%. Any earnings that nonprofit 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 Ten nationally ranked health insurers for Medicare and Medicaid are nonprofit and 80% of the Top Ten for commercial business are nonprofit plans, even though they were far less than half of all the plans reporting. Nonprofit health insurers also dominate the Top Twenty 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 Number One in their regions or ranked “Among the Best” in their regions are nonprofit. Nonprofit health insurers have dominated these rankings for all four years that J.D. Power and Associates has been issuing them.
· Nonprofit 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 health care needs assessments.
· Research has also shown that nonprofit 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 nonprofit sector, which has historically played and continues to play a vital role in both financing and delivering health care in the U.S. As one former CEO of a prominent nonprofit 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. They are organizations created for purposes other than profit. The nonprofit sector is where we go for solving our most troubling social problems. It is where we go to protect our values and culture. The nonprofit sector is society’s safety net.”
Many nonprofit health insurers are also exercising leadership in local health care reforms--partnering with health care 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 the recently appointed Administrator of the Center for Medicare and Medicaid Services, Don Berwick, M.D., is also 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 to have said, “The successful redesign of health care 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 nonprofit health insurers, Dr. Berwick appears to “get it.” Let’s hope everyone else will too.
Mr. McPherson is President of the Alliance for Advancing Nonprofit Health Care, based in Washington, DC, www.nonprofithealthcare.org. Its mission is to promote both preservation of a vibrant nonprofit health care sector and improvements in the sector’s performance in serving communities. Comments or questions can be directed to Mr. McPherson at 877-299-6497 or
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