With Health Reform, the Obama Administration Needs to Learn to Keep its Enemies Closer

In October 2009, the Obama administration declared the insurance companies an enemy and began keeping them at arm's length (or really middle finger length). This move was triggered by the decision of the health insurance companies lobbying group, AHIP, commissioned a PricewaterhouseCoopers (PwC) report that forecasted significant increase in health insurance premiums and lack of affordability. This report was released shortly before Congress voted and PwC (why the lowercase w? What did waterhouse do?) shortly refuted AHIP's interpretation and how the methodology was applied.

Kathleen Sebelius of Health and Human Services returned the favor with a Wall Street Journal editorial that was released the day before Medicare Advantage bids were due. It's methodology was also not applied well and was also released too late for it to have an impact. Although, Sebelius could have extended the deadline for bid submission if she actually wanted something to be done. Like the PwC report, it was the equivalent of an abstinence lecture to a couple during their 6 month prenatal visit.

This WSJ editorial was not the first jab on the health insurance industry by Sebelius nor was it the least effective. The prize for the least effective was the angry letter to WellPoint that pretty much received a F#ck Off response from their CEO.

The Obama administration has tried to brawl with the insurance companies as part of is health reform strategy and given the AHIP PwC report, I can't blame them. However, I do blame the strategy. Providers and hospitals brawled with the health insurance companies in the 90's once providers got big enough to fight back. In California, Sutter Health System and California Blue Shield made some of the World Wrestling Foundation rivalries look tasteful in comparison. It was also about as effective as both lost their reputation and money over the stalemate. Through consolidation, providers and health insurance have become equally strong which has mostly higher payments to providers and higher insurance premiums for the country. Still licking wounds from their previous battle, these two were mistrustful and had no interest in learning each other's business. For example, with medical management, providers have missed the opportunity that insurance companies capitalized on with nurse case management programs. Insurance companies could learn from hospitals on how to develop better cooperative partnerships with physicians.

The Obama administration is fighting a 90's style battle with insurance companies. Like acid wash jeans, it's no longer fashionable and not yet retro cool (like leg warmers). Although most in health care thought that the insurance companies would lose influence as their business models were not sustainable, they are as powerful as ever. There is no reason to think that the Obama administration's battle would have a different outcome as doing the same thing but expecting a different outcome is the definition of insanity.

My recommendation is that the Obama administration keep a closer relationship with the insurance companies. There is much to learn about the insurance model that can be applied to populatio health or how to talk its beneficiaries. For example, insurance companies learned a long time ago not to send glossy 4 page full color material to seniors since they see it as a waste of money. Insurance companies could price out some of the Obama administration initiatives which will help address future claims of affordability. Simply, it's an Abraham Lincoln, Team of Rivals approach of staffing his cabinet with his enemies. It would represent a new approach to competing with the insurance companies since the current approach hasn't worked for anyone else.