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Originally Posted by Villages Kahuna
Thanks for providing those two links to the proposed House and Senate healthcare bills, Steve. I scanned the Senate bill, but haven't gotten to the House version yet. So far I'm left with a couple impressions (from the Senate version)... - They seem to have closed a lot of loopholes that permitted insurance companies from enjoyng lots of profit while denying coverage to lots of people.
- If enacted as is, there could actually be a signifciant reduction in healthcare costs for those covered by policies which will be subject to the provsions of the bill. I reach that conclusion only with the "gut feel" that government involvement really has resulted in reduced costs, in the VA prescription drug program as an example, by limiting private companies from enjoying egregious profits under the umbrella of "friendly" legislation. Maybe that can be extended to doctors and hospitals, maybe not.
- Whether any cost reductions would pay for covering the millions of people who currently don't have health insurance is problematic. I'd have to see a couple of comparitive financial analyses by independent sources.
- The biggest weakness in the bills is the effect it might have on insurance companies being willing to stay in the health insurance business. Could the entire country suffer in the same way that homeowners are here in Florida as the result of government prescribing how the insurance business will be run? For those of you who don't know, a whole bunch of big homeowner's insurance compnaies simply withdrew from the Florida market. The result is that the State has become the insurer of last resort for losts of Floridians. Could that happen with health insurance companies? What would happen if a bunch of the big hospitalization insurance companies--say United Healthcare--concluded that staying in this business under these kinds of government restrictions and oversight simply wasn't worth it?
So the "ying" I've come down with so far is that the healthcare situation could actually get better. But the "yang" is that over-involvement by the government could actually result in a bunch of insurance companies throwing in the towel on this business. Then the government would become the principal provider of health insurance--truly the nationalized system that no one who's posted here desires.
This is not a risk-free proposition. |
Insurance companies generally break their operations into corporate profit centers, so that if one business area goes down, the rest are immune. So, the "health insurance company" - as a separate corporate entity - of a major multi-line insurer is the entity most concerned with these bills.
The separated health insurance company will find its business practices having to align with whatever regulations (and reporting requirements) (and oversight) will come from a health care law. Allowable and retained "profit" will be determined by the Secretary, HHS under such law, which means deep access into company books will also occur. Insurers will make certain that the only records access for their operations will be with the separate "health insurance company (HIC)" within their conglomerates. The downstream battle will be when/if the SecHHC starts getting involved in HIC internal organization as to administration, quality control, et cetera; in effect "managing" the HIC by allowing/disallowing operational costs as acceptable overhead and impacting "profit" to be applied as consumer rebates. Depending on how the SecHHC to-be-created agency for handling HICs operates, major insurers abandoning health insurance as a business line for lack of profitability is indeed probable.
The Florida analogy is correct. Some smaller companies willing to live with the tighter profit margins sprung up, but testing their viability has not yet happened, and it's still a question how much State backing may yet have to occur should a significant disaster event happen.
Nothing has come forward to show whether any coordination of the development of this health care law with the major insurers occurred. It sounds like something the Administration/Congress is going to shove down insurers' throats in a take-it-or-leave-it manner, with the "leave it" resulting in an all-ages Medicare program run by SecHHS.
This will be interesting as it goes forward.
And then, what happens next for the insurance industry? There is ALWAYS a next step. Will life insurance and annuities be the next federal target after ithe fed acquires control of health care insurance? That would virtually place the lion's share of the financial world in the government's control?