Thursday, September 10, 2009

Obama's Speech on Health Care Reform - and so?

One thing is clear in the aftermath of President Obama's well-delivered (did we expect otherwise?) speech on health care reform before the September 9 Joint Session of Congress...oh yes, and the American people.

Insurance companies seem to have come out potential winners? The publicly trade stocks of all the health insurers, the usual suspects, are up today and up substantially. As of this writing, with less than one hour to go in today's trading session, the common stocks of Aetna, Cigna, United HealthGroup and Wellpoint are up, for the most part, between two- and five-percent. What does this suggest? That Wall Street expects to see higher profits and solid growth from these companies in the years to come, at least at first blush.

While the President did "mention" a role for a public option, clearly there was no strong emphasis on it. Rather, if legislation does pass, we can expect to see the following benefits - via private health insurance companies:

1. Elimination of pre-existing conditions clauses;
2. No more cancellations based on development of disease, annual or lifetime caps on benefits, or failures to disclose adolescent acne.
3. An "exchange" - still fuzzy on that one - where people can go to find insurance policies and maybe even a public option, too.

There was more, but that was the nut of much of the President's speech.

So we may look forward to all of these wonderful benefits that the health insurance industry will be more than happy to splash upon us. Here's the rub: what about cost controls? Sure, United HealthGroup (United), the largest health insurer in the U.S., will be more than happy to write policies with pre-existing conditions and other cancellation clauses. But at what price?

Did I mention price? If I have a pre-existing condition - which I do (multiple sclerosis) - you mean that United will now be happy to write a policy for me "at a fair price?" Oh, gee, did I say "fair price?" We heard no mention about the effect of these "benefits" on policy pricing.

Several things are likely to happen. First possibility: United raises all premiums in order to recoup or maintain their profit margins in exchange for accepting higher risk customers. Second possibility: United will happily write me a policy if I am willing to pay 50-percent more for it than a healthier person. I just pulled that 50-percent out of my ass. It could be 20-percent or 100-percent, maybe even less. But who knows? No mention of policy cost in the President's speech.

It's kind of like a crack dealer, not that I have firsthand experience, mind you. Based on the dealer's analysis of you when he meets you on the street, he could charge you anything he likes, right? I suppose, anyway.

Car dealers can be the same way, especially if you're a woman, right?

The Republican responses to the President's speech are so far pretty much little changed, as if they really didn't pay attention while he was speaking last night. Even the Louisiana Congressperson's televised response was clearly written weeks ago. Nope, the Republican talking points are little changed. The damned Dems still want a government takeover of the entire health care system. Funny that I didn't hear that last night, nor did I read it in the transcript, nor have I EVER heard it except from a teeny weeny spectrum of legislators.

The Republicans are clearly all gahgah about the possibility of tort reform and the elimination of what they pen as "junk lawsuits," which I personally define as any lawsuit in which a Republican or corporation is not the winner. But that aside, the numbers clearly demonstrate, thanks to work available from AM Best's Aggregates and Averages, that malpractice lawsuits are not the horned devil and deep-pocketed demon cause of skyrocketing health care costs they are made out to be. They are, rather, the proverbial drop in the bucket.

Look. Everyone wants to make a buck and why not? People should be allowed, encouraged and honored to succeed, but succeed fairly, without someone, without millions of people feeling they've been ripped off. I fear, and I suspect I am not alone in this, that we just may be opening the floodgates for health insurance companies, the very same folks that we have worked so hard to paint as villains or at least culprits in this mess, to generate yet greater profits and revenues, charging consumers still higher prices. This time, however, they may have even greater "justification" for it because we will be empowering them to assume greater risk in their underwriting thanks to legislation.

The health insurers may just have succeeded in getting the payoff they've been hoping for through their "investments" in Senators and Congresspersons. So what if insurance companies have been paying out less and less of each premium dollar, the result being increased profits for stockholders and increased salaries and BENEFITS for executives. So what if they haven't felt a huge priority to make their administrative functions more efficient without sticking it to policyholders. They've been investing in a Golden Goose and it just might finally be paying off in the months to come.

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