Health Insurance Companies are Utilities

April/02/2010 16:22PM
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Why did the health insurance industry endorse the health care reform bill?

My theory is simple, they went from a lose/lose to a win/win. Without health care reform they could not collect enough in premiums to cover expenses. They were operating on a 3% net margin at best. Young people and healthy people didn’t buy insurance. Hence, they were insuring an aging population. And, a fatter, less healthy population.

Now, they are off the hook. You, the taxpayer, get the risk. When the small business guy can choose between buying insurance for employees or paying the fine not to buy, many will pay the fine. Hence, a whole lot of small business employees will get dumped right into the ” government pool”. All the health insurance industry does now is collect and distribute monies. With help from the IRS. Much of their revenue will be from the government instead of the companies providing employee insurance or the individual buyer. They will get their fair share from the pool for that state and the government will get the cost for the already ill without insurance, the newly ill without insurance, and those who have exceeded limits. Nice deal.

My guess is they will increase that 3% net number substantially and get out from under the stigma of being the bad guys who deny claims or insurance all together. That now moves to the government. Think of that gorilla-faced postal employee who takes way too much time on each transaction. She will now be handling your insurance claims. Each health insurance company will get a fair share of the pool in every state they now market insurance. Rates will be set by the federal government. Fines will be collected by the IRS as well and premiums from those in the pool. Many uninsured will go to Medicaid. High risks go to the pool. Losses go to the government or you the taxpayers.

If premiums go up, which they will, the insured will move to the pool. Losses will be borne by the hospitals and the government. Not, the insurance industry.

So, the insurance industry which was sailing into shark infested waters now finds the seas calm and sweet. How nice for them.

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