Americans often feel that health insurers don't care about beneficiaries' long-term health outcomes. Yet insurers aren't intrinsically heartless, as folks often allege.
Rather, insurers are simply motivated by profits. But so are doctors, hospital administrators, and medical device companies. In fact, the profit motive drives innovation–it's why America develops the world's most advanced medicines, medical devices, and surgical procedures. Elites from around the world seek treatment in the U.S. for good reason.
In other words, the crux of the problem with health insurers isn't profit-seeking. Rather, it's the misaligned incentive system they operate within.
Doctors, hospitals, and drug and device companies all make money by treating patients. They've explicitly made "patient-centricity" their goal in recent years–the latest industry buzzword. It's a concept that makes perfect sense: Our healthcare system should always put patient well-being before the interests of other, albeit important, stakeholders.
Insurers' business model, by contrast, hinges on making sure that total revenue from premiums always exceeds the amount of money spent on treatment–even if that means making it harder for patients to get the care they need. We need to realign these incentives so that insurers have a vested interest in a patient-centric health system that delivers high-quality care to all Americans without erecting unnecessary hurdles to treatment.
Consider how insurers have often approached patients with hepatitis C, a viral liver infection that can cause cirrhosis or cancer. An estimated 2.4 million Americans are living with hepatitis C–and over half may not know they have the disease.
Not long ago, treating those patients required several injections over six months to a year–and the shots failed around half the time. Now, hepatitis C can be cured 95% of the time with pills in as little as eight weeks.
Yet fewer than one in three insured people diagnosed with hepatitis C receive the cure within a year of their diagnosis, according to an August report from the Centers for Disease Control. These patients simply aren't receiving the care they need, despite being insured.
It's true that hepatitis C treatments aren't cheap–and that they are cheaper in other countries. Insurers often pay about $30,000 per bottle. But consider the alternative. If a liver transplant becomes necessary, the cost may exceed $500,000. Treating cirrhosis starts at around $23,000 per year and reaches $60,000 a year when the disease enters its end stage. It's financially smart–not to mention patient-centric–to focus on curing hepatitis C rather than treating its symptoms.
Or consider Continuous Glucose Monitors for diabetes. These devices measure patients' blood-sugar levels 24/7 and can even be equipped with insulin pumps that automatically supply the dose needed to keep patients healthy. CGM systems can make controlling diabetes much simpler, reducing complications that can land patients in the hospital. It can also give people with pre-diabetes the personalized feedback they need to make lifestyle changes.
Some insurance plans cover CGM devices, but often only for people who can meet certain criteria, like being able to prove they require insulin. Why not cover it for all persons with diabetes to prevent progression, as well as people at the highest risk of developing diabetes?
In other words, failure to put patients first up front can cost the healthcare system much more down the road.
However, insurers don't necessarily take this long-term view. Right now, their short-term outlook takes priority, especially given the current economic climate. Most Americans get their coverage through work. Employers change their insurance providers from time to time, based on market considerations, and Americans today average about 12 different jobs over their working lives. Many of us are intermittently leaving one health plan and joining another.
This creates a situation where insurers are asking why they would invest in a patient's care if that patient might cease being a customer in a year or two. They don't reap the cost savings.
Of course, realigning these incentives won't be easy. Some reformers have suggested shifting even further toward "value-based" reimbursement models–in which insurers pay doctors, hospitals, and drug and device companies based on patient outcomes. Essentially, if a particular drug or operation works well, and restores a patient to health or effectively keeps disease at bay, insurers offer a generous reimbursement. If the medicine or surgery doesn't prove very effective, insurers pay far less.
Tying higher reimbursements to positive outcomes–outcomes that largely guarantee that insurers will avoid paying for even more expensive care down the road–could make insurers more likely to cover high-quality care from the outset. The reality is that a focus on patient-centricity will result in improved quality outcomes and reductions in costs–the issue is the timing of these cost savings.
Other reformers feel that transitioning away from our current employer-sponsored insurance system towards a stronger individual market would force insurers to compete for consumers' long-term business–and thus give them more reason to offer top-notch care up front.
We need to make our entire healthcare system more patient centric. Only then will profit-driven insurers make positive patient outcomes the focus of coverage decisions and care delivery.
John Whyte, M.D., MPH is the Chief Medical Officer of WebMD.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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