Health insurance may face obsolescence at the hands of accountable care organizations

Insurance NewsAs the insurance news concerning the health industry begins to change, many are beginning to question how necessary insurance companies actually are. For centuries, insurers have provided access to policies that allow businesses and individuals to enjoy some degree of protection against unforeseeable events. People rely on insurance companies to handle the risks associated with daily life, but fall victim to the whims of these companies that are very much business oriented. When the Affordable Care Act was signed into law in 2010, it opened the way for a new system, one that may make insurance companies obsolete.

The law allows for the formation of accountable care organizations, which are governed by health care institutions such as hospitals. These organizations can provide health insurance coverage to some degree, but their primary goal is to keep people healthy. Currently, the majority of health care professionals are paid through a fee-per-service system, which encourages overtreatment for the sake of profit. This method focuses on treating specific illnesses rather than keeping patients healthy. In an accountable care organization, however, professionals are paid a fixed rate per patient. The organizations will also have an incentive to keep people out of hospitals by ensuring that they are healthy, as they will receive funding for doing so.

For now, health insurance is still a very important part of people’s lives. Accountable care organizations are gaining popularity, however, amongst consumers who have become disillusioned with their insurance providers. If they become the favored method of health care, the health insurance industry may find it difficult to retain consumers in the future.

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