Health insurance IT isn't dead, it just smells funny

Posted by Mark Everett Hall

Opinion: Over the weekend, the US House of Representatives passed a health care reform bill that, if signed into law, automatically makes a large portion of the IT work among private insurers totally useless.

The New England Journal of Medicine has estimated that private insurance company overhead is around 31 percent. By contrast, government-run Medicare is estimated between two percent and fourĀ  percent. The single-payer plan in Canada is reported to run its overhead below 1.5 percent.

Part of the reason for that huge difference is that the large private insurance companies keep an army of software developers and IT operations staff, along with attendant analysts and administrators, employed to run applications designed to deny claims of sick people. They use computer automation to make it "more efficient" to deny claims to as many people as possible. But the people needed to support those systems will soon no longer be necessary.

altI suspect some of these highly paid individuals probably had a tough time looking in the mirror each morning while thinking about, say, how to perfect an algorithm for detecting pre-existing conditions in people who did not know they had them; or how to create an analyst's dashboard that shows when payments for cancer treatments exceed some CFO's spending target for the quarter.

Well, they won't have to fret much longer because when that bill goes into law, those IT folks and their human resource ecosystem will become completely useless. Insurance companies who keep them on the payroll will be at a disadvantage to their competitors who fire them first.

Across the country I'm guesstimating that a few thousand more IT folks will hit the unemployment line. It'll be difficult for them to find work. They have the extra burden of being perceived as having skills of limited value.

Worse, to some, they will have the added stigma of being ethically-compromised. After all, who wants to hire someone whose job was figuring out ways to cut off benefits to sick people?

But these newly unemployed will have one thing in their favor, at least they'll be able to get health insurance.