Blog Series Kickoff: “In Their Shoes” – Disruption in the Health Insurance Industry

By Russell Benaroya

This week is a big week for health care and for our nation. Why? The Supreme Court is hearing arguments about the constitutionality of health care reform. You know this is important when people hoping to get inside to hear the arguments are camped out in line with chairs, blankets, food, and water – much like the throngs of anxious teenagers so eager to witness the premier showing of Hunger Games.  I mean, an epic battle of sorts is expected – but we’re talking health care here!

Specifically, the Supreme Court is keying in on the Individual Mandate provision contained in The Patient Protection and Affordable Care Act (colloquially known as "Obamacare"). The Individual Mandate makes it a Federal requirement that all Americans carry health insurance. Failure to carry health insurance will result in certain penalties. Individuals that are below 400% of the national poverty line ($92K for a family of 4 in 2012) will receive a subsidy from the government to help cover the cost of insurance.

The idea behind the Individual Mandate is that insurance only works when you have enough low risk individuals offsetting the higher risk individuals and unexpected health care incidences. By requiring everyone to have health insurance, it will lower the overall cost for everyone.

Will it? Probably not! There are not too many examples of government mandated reforms that have successfully driven material cost reductions. We could go in a bunch of directions here (health as a moral or economic imperative?), but the point I want to make is that this stuff impacts all of us and we need to be conversant in the issues that will dramatically impact our pocketbooks and our societal fabric!

The Individual Mandate is just the tip of the iceberg. If you really want a bird’s eye view of health care reform, you can learn more here from this very fun and informative video produced by the Kaiser Family Foundation: 


Even if we forget about government driven reforms, the market forces driving change are unstoppable. And they should be. Continual rising costs that could equate to a $4.5 trillion health care system by 2020 is just unthinkable, especially in light of the fact that we don’t have any better life expectancy per capita health care dollar spent than many other developed countries. We are seeing large hospital systems fortifying their market share through acquisition. Meanwhile, smaller independent physician practices are being swallowed up or going away because they can’t integrate into the data flow of a patient moving among clinics, hospital facilities, and their home.

We must disrupt the system. And right at the heart of that system sits an 800 pound gorilla: the health insurance company!

What I’m doing today is kicking off a series of discussions I’m calling “In Their Shoes.” In this series, we’ll tackle some of the issues that insurance plans are undoubtedly facing as they seek to position themselves in a rapidly changing market environment.

The risk here is that “rapidly changing” is not something that health insurers are particularly adept at, especially given that they are highly regulated by both federal and state governments. Additionally, while we like to knock our health insurance company as being “evil” (they have the lowest net promoter score of virtually any industry), the reality is that the system of bad actors driving costs higher also includes physicians, hospitals, and you. I’m not absolving the insurance plans, just acknowledging that they are an easy target.

Over the course of the next month I will be writing posts on the following topics:


  1. The Unmentionable: Subsidizing Unhealthy Lifestyles
  2. Know Your Customer? Consumers vs. Businesses
  3. Health Insurance Marketing: Back to Basics!
  4. Success or Peril: Regional vs. National Insurance Plans
  5. Consumer Focused Innovation: “A Have to Have” or a “Nice to Have”


Let’s have this discussion in a way that can help the insurance plans find better ways to serve us. No amount of regulatory reform will improve our lives in a sustainable way. But this is a unique time when the largest health insurers in the country are actually listening to us and working quickly to figure out how to meet our needs. Let’s take advantage of this window together to get smarter about the issues and influence change.

Posted on March 28, 2012 05:07 PM
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