Lately, there has been a lot of discussion about for-profit insurance vs. not-for-profit insurance. The general consensus among the public seems to be that for-profit insurance is evil, because all they are doing is trying to please the shareholders. However, for-profit insurance might not be as bad as many think.
Non-profits in the healthcare world often aren’t exactly what is typically a non-profit organization. The common association with the phrase “not-for-profit” is social welfare of some sort. While it is true that non-profit insurance companies can insure people who are walking medical miracles because they can essentially take the tax advantage they receive for being not-for-profit and apply it to the consumer, one could claim that non-profits are just the same as for-profit insurance companies except for their tax advantage. Are non-profit insurance companies competing with an unfair advantage?
Can non-profit and for-profit insurance companies coexist?
With the advent and soon-to-be implementation of insurance exchanges, consumers will have a clear choice on insurance. Rather than just being targeted by one type of insurance plan or being streamlined into employer insurance, consumers will have clear options laid out for them and will be able to choose the plan that is most fitting for them. Hypothetically, this is already being attempted via eHealthInsurance and other online marketplaces for insurance. The choices are clearly laid out and quotes are provided on the spot.
For-profit insurance companies are generally more impacted by market forces. They have a greater need to please consumers in order to be in competition. Non-profit insurers, on the other hand, have a consistent consumer base: those who need insurance but can’t seem to get it. With insurance exchanges opening in hopes of getting exactly those people to buy insurance, it is likely that non-profit insurance will thrive, even though for-profit insurance is more likely to have pricing that is favorable to the consumer.
It is entirely possible, though, that non-profit and for-profit insurance companies are serving completely different markets. If this is true, both types of insurance could continue to thrive as the exchanges are implemented. For-profit insurers could continue with their target market of those who don’t have problems getting insurance. Non-profit insurers could continue with those who have a difficult time getting insurance. Each type of insurance has a different mission, and that could continue to play out in the marketplace.
When it comes down to it, only time will tell if both types of insurance can continue to succeed with the implementation of the insurance exchanges.