I recently posted an article on the Colorado Health Insurance Insider about my views on making Medicare available as an opt-in option for Americans younger than 65. I got a comment on the article that I thought brought up some good points and wanted to expand on some of the ideas. The reader pointed out that a good number of private health insurance plans are non-profit, and included a link to some facts about non-profit health plans in the US. Here in Colorado, the vast majority of our private health insurance plans are for-profit (Kaiser Permanente and Rocky Mountain Health Plans are notable exceptions). But according to the data from the Alliance for Advancing Non Profit Health Care, 48% of Americans with private health insurance are covered by non-profit plans – not an insignificant number at all (this data is based on health plans with enrollment of at least 100,000 members).
My concern is that non-profit does not necessarily mean low cost and efficient. Profit is what is left over after expenses are calculated, and those expenses include everything from CEO salaries to artwork in hospitals. Another bonus for non-profit health insurance plans – as with any non-profit – is that they can apply to the IRS for income tax exempt status, and many do. Here in Colorado, Kaiser is tax exempt, and has had to work deals with our insurance commissioner recently to determine how to best utilize the $700 million that they had in reserves.
As a test, I got quotes for myself for a $5000 deductible HSA qualified plan with 100% coinsurance from six different Colorado health insurance carriers: Aetna, Anthem Blue Cross Blue Shield, Assurant, Humana, Kaiser, and United HealthOne (Golden Rule). The prices ranged from $78 to $130. Kaiser was $93, higher than Assurant, Anthem Blue Cross, United, and Humana. So although Kaiser is a non-profit health care system, in the individual market they are not providing less expensive health insurance than the for-profit health plans in Colorado.
I do agree with the rest of the comment: guaranteed issue individual health insurance will only work if everyone is required to buy into the system, and “Who pays the tab doesn’t change the underlying problem that we have runaway demand for very expensive care supplied by an inefficient system.” One way or another, a lot of reform is needed.