Big Insurance Companies Should Be Nervous About Their Future

By Joe DeSantis

The likely prospect of divided government in Washington means that major health legislation is unlikely anytime soon. But this does not mean big insurance companies can count on the status quo for long. Three interlocking trends are conspiring to dramatically reduce the role of big insurance companies in the American health care system.

The first of these trends is a move toward capitated payments in health care. Capitation is an alternative payment model in which, instead of being paid per episode of care, doctors are given a flat, monthly, per-patient fee in advance that covers all needed care. Many independent doctors and doctors’ groups suffered huge financial losses during the pandemic because of a drop-off in patient visitations. However, the ones receiving capitated payments fared much better, which will lead to more doctors accepting these arrangements.

Capitation has other advantages. Reducing the administrative overhead and time spent submitting individual claims for each service provided allows doctors to focus more on preventative medicine and helping coordinate patients’ care. The result is lower costs because of better health outcomes, which is why some insurers are pursuing capitation as part of their push toward paying for value in health care.


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