Tags: Pfeffer | health | insurers | healthcare

Stanford's Pfeffer: Health Insurers May Be 'Doomed'

By    |   Monday, 20 October 2014 12:16 PM

The future doesn't look bright for health insurance companies, says Jeffrey Pfeffer, a professor of organizational behavior at Stanford's Graduate School of Business.

"Cost containment and competitive pressures will transform, if not doom, health insurance companies," he writes in an article for Fortune.

So what's the problem with health insurance companies?

"The time spent dealing with insurance intermediaries costs money and aggravates physicians and their patients," Pfeffer says.

"In 2012, more than 460,000 people were working in the health insurance industry, and employment growth in health insurance is much higher than for the providers of actual healthcare. Of course, managing all these people is expensive — very expensive."

And the service health insurers provide isn't so great, he writes. "Health insurance companies often improperly reject claims and deny coverage."

So what's going to do in those companies?

"Increasing levels of competition among health systems, particularly in large metropolitan areas, will eventually cause many large healthcare providers to do what Kaiser Permanente has already done — offer their own health plans and disintermediate the insurance intermediaries," Pfeffer notes.

"The ever-expanding administrative costs of healthcare will eventually reach a limit, and this will happen sooner than many people expect," he adds.

"Health insurers' dismal customer service and high overhead costs make them easy and inevitable targets. These companies' survival depends on fundamentally reinventing their business models. Otherwise, they are doomed."

Meanwhile, Stephen Myrow and Brandon Barford, partners at research firm Beacon Policy Advisors, say Obamacare could cause the Federal Reserve to delay raising interest rates.

"During the 2015 tax filing season, millions of low- to moderate-income taxpayers will likely first learn that they exceeded the income eligibility levels for the Obamacare subsidy they received in 2014 and will need to repay the government," they write in an article for CNBC.

"This repayment could result in a sufficiently abrupt and targeted reduction in consumer spending that could delay the Federal Reserve from starting to raise short-term interest rates."

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The future doesn't look bright for health insurance companies, says Jeffrey Pfeffer, a professor of organizational behavior at Stanford's Graduate School of Business.
Pfeffer, health, insurers, healthcare
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2014-16-20
Monday, 20 October 2014 12:16 PM
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