Want to kill health insurers? This start-up is teaching hospitals how.
washingtonpost.com
washingtonpost.com
But more seriously -- I see two real weaknesses in this idea. First, hospitals typically don't have the doctors directly on staff so they have visibility but relatively little leverage. They provide an army of nurses but the doctors are independent contractors. Second, you need scale to make it work. It's not clear that a single hospital has the right scale to be an insurer.
I think the right way to kill health insurers is just by fiat. Medicare for All.
Health Insurance is not, and has never been, a real market with normal economic behavior. Imagine if car insurance that let you drive like an maniac but only based your premium of age of the car, then if you had an accident, it would spend unlimited amounts of money to fix your existing car. And after your car is ten years old, the government takes over. That's our health care system.
A rational system would accept that everyone dies, share the risk of rare accidents across a large pool of people, and spend a lot of money earlier in peoples lives rather than waiting until they get to the emergency room.
I'm a capitalist to the core but it just doesn't work with you don't have a free market with a normal price-elasticity curve.
However desirable that may be, the reason it is unlikely to happen is that the incentives are aligned the wrong way for the relevant decision makers. Insurance companies are funding congressional campaigns; as long as this goes on, Congress is unlikely to try to put insurance companies out of business.[1]
The approach discussed in the article, for all its weaknesses (which you have nailed, IMHO), at least has the incentives in the right direction. Congress may love insurance companies, but hospitals and doctors do not.
[1] Indeed, one of the primary points of "Obamacare" is that Americans are now required by law to purchase insurance companies' offerings.