As I wrote last week, one of the nation’s biggest employers — Boeing — is pioneering a concept in providing health care benefits to its employees that eliminates insurance companies as middlemen.
What Boeing is doing represents a seismic shift in health care financing and delivery that potentially will have more far-reaching effects than Obamacare, primarily because it is coming from the private sector, not the government. It is a shift that the big health insurers have been anticipating and preparing for since long before the Affordable Care Act was enacted.
We tend to think that insurers with well-known brands like Aetna, Blue Cross, Cigna and UnitedHealthcare have been around forever and likely will always be with us as they are currently structured.
But the large corporations dominating the health insurance landscape bear little resemblance to the companies they were when they first appeared on the scene. Their current metamorphosis is just a continuation of a corporate evolution.
I’m not suggesting they will disappear, but I am willing to bet that in a few years, they will not be providing our health insurance coverage — at least in the way they do now. Instead, they will have transformed into companies that make most if not all of their profits in non-insurance lines of businesses.
You only have to look back a few decades to see just how dramatically the big insurers remade themselves as a result of pressure from both Wall Street and the marketplace.
Take Humana, where I used to work, as an example. Humana began as a nursing home company in 1961. When I joined the company 27 years later, it had sold all of its nursing homes and become the world’s largest hospital company. A few years later, it sold all of its hospitals and became Humana the managed care company.
I left Humana to join Cigna in 1993. Cigna, which started out as a fire and marine insurance company, had by then morphed into one of the world’s largest multi-line insurance companies. Its peers were Aetna — which initially was just a life insurer — MetLife, Prudential and Travelers. All were selling health insurance by this time. But within a year or so after I joined Cigna, Wall Street decided that multi-line insurers were dinosaurs and insisted that the companies divest some of their businesses so they could focus on just one or two.
MetLife, Prudential and Travelers all sold their health care business and Aetna and Cigna decided to get out of the property and casualty business to focus on health care.