Managed Care Matters

Friend and colleague Bob Laszewski has shined a very bright light on Wall Street's ignorance about the health insurance business.

Bob notes: "We are way past the time the really smart people on Wall Street (that would be all of you) needed to start asking just what the future of this business is. If the answer you get is that the future of managed care is just to ride an unsustainable health care cost trend rate many more years into the future[bold is mine] you might just want to dig a little deeper this time."

As usual, Bob is dead on. Health plans make their money by pricing just above trend, selecting risks, and avoiding claims wherever and whenever possible. They are getting (justifiably) hammered by regulators and the press for claims avoidance, and Wall Street may have finally woken up to the inherent problems in the standard health plan business model.

There are far too few health plans that actually do anything remotely resembling 'managing care" - they manage risk, they manage reimbursement, they manage analysts - but they do not manage care.

I've said before, and repeat here - health plans that know how to manage care, particularly for the previously-uninsured, are going to do really well when universal coverage becomes the law of the land.

Unfortunately, there are few plans that qualify.