DRAFT of letter from Bruce McPherson, President, Alliance for

By Lauren Watkins,2014-06-18 00:32
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DRAFT of letter from Bruce McPherson, President, Alliance for ...

    Letter to the Editor of the Detroit News

    by Bruce McPherson, President and CEO

    Alliance for Advancing Nonprofit Health Care

    Submitted on January 15, 2010

Note: This was in response to a Letter to the Detroit News Editor entitled “Don’t Discriminate Among

    Michigan health Insurers, by Grace-Marie Turner, President of the Galen Institute

Michigan Offers Stellar Example of Nonprofit Health Care

It is encouraging to see provisions in the Senate’s health care reform bill that incentivize insurers to behave

    more like many nonprofit health insurers do already. Research has shown that nonprofit health plans out-

    perform for-profits in terms of lower premiums, higher quality and customer service, and other benefits to

    their communities.

Michigan is a good example. The Blues there are truly fulfilling a nonprofit mission that helps keep rates

    low for Michigan residents. They already act much as Congress wishes all insurers would in that they take

    all comers and do not rate based on health status. And any income they earn on any of their insurance

    products, which only happens from time to time, is reinvested for the benefit of its members and the

    broader communitynot for the benefit of private investors.

The Michigan Blues and other nonprofit insurers in the state are operating on razor thin margins and aren’t

    making money on health care. Therefore, taxing these entities defeats the goal of making coverage more

    affordable as taxes will simply need to be passed on to consumers in the form of higher rates. Commercial

    insurers at least have some margin, and access to capital through the equity markets, to absorb some or all

    of any additional taxes.

This kind of nonprofit behavior exemplified by the Blues in Michigan needs to be encouraged in reform.

    Nonprofit and for-profit health insurers are not the same, and must not be treated as if they were. The same

    is true for nonprofit hospitals and other nonprofit health care providers versus their for-profit counterparts.

    Exempting nonprofit insurers that meet very specific criteria from the insurer tax is a good way to

    recognize and promote that distinction. And the amendment in the Senate bill that lays out criteria for

    exemption doesn’t just encourage this behavior in Michigan. It applies to nonprofit insurers throughout the


One likely requirement to gain exemption is that insurers will actually have to show they lose money in the

    individual market. So, they’ll have to prove they pay out more in claims than they take in from premiums.

    Let’s not penalize these companies for their efforts to contribute toward expanding access and maintaining affordabilitykey goals of reform.

Meanwhile, to really drive down costs, we need to continue focusing on how to “bend the cost curve”—

    reducing the rate of increases in costs through illness prevention, health promotion, and improvements in

    patient safety, quality and efficiency. This is the only way to improve and maintain affordability of health

    insurance, since premiums track costs.


Founded in 2003, the Alliance for Advancing Nonprofit Health Care represents nonprofit health plans,

    hospitals, nursing homes, community health centers, and other health care providers dedicated to

    preserving a robust nonprofit health sector while enhancing its performance in serving communities and

    society as a whole.

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