Wednesday, March 25, 2009

America’s Health Insurers: Bullies Meet a Bigger Bully

Think about the depression that we’re entering in America. Millions of people are losing their jobs, and thousands of companies are either laying off workers, closing their doors or dropping employee benefits. Many of those now-unemployed people are also losing their health insurance. There are presently about 48 million uninsured people in the US. This gives Congress the political cover to do what they’ve wanted to do since the Clintons were in the White House...nationalize health care.

I just read an Associated Press report about the health insurance industry. The insurance companies are terrified of the future, which looks like it’s going to include some kind of Federal takeover of health insurance.

America’s Health Insurance Plans and the Blue Cross/Blue Shield Association (BCBS), two giant health industry interest groups, issued a letter to key senators on March 24th. In the letter, they stated that their member insurance companies were willing for the first time to curb the controversial practice of charging higher premiums to people with a history of medical problems.

Although the proposal left open certain loopholes, it’s a pretty big change of the old policy of “risk rating.” In today’s insurance market, insurers charge higher premiums to people with previous medical problems and who are trying to purchase individual coverage. If such a person even gets an offer of coverage from an insurer, many times they cannot afford the premium. However, in group coverage through employers, past medical history is not usually considered.

Last year, the insurance companies offered to forego the practice of denying coverage to sick people.

The conciliatory offers did not extend to small businesses, though. Small businesses with even one sick worker can see their premiums jump up significantly year to year.

It’s somewhat comical to see what the insurance companies will do to save their own skin. For decades, they have been sticking it to individuals on health insurance premiums. But now that it looks like Washington is going to set up national health care that will either be in direct competition with them, or might just put them out of business, they have had a “come to Jesus” experience.

Please don’t misunderstand the tenor of this article. I believe that the free market should dictate health care policy, not government. I believe that nationalizing health care is an unconstitutional usurpation of power. I’m just amused to observe that the bullies in the health insurance industry have met a bigger bully, and instead of fighting, they’re cowering.

If the insurance companies wanted to play hardball with Washington, they could win. All they would have to do is to begin systematically selling off their government securities, such as Treasury Bills and other Federal debt instruments. A small sell-off would shake the very foundations of the Federal Government and threaten to crash the entire financial system.

That would put Congress and the President on the defensive, and stop health care nationalization.

1 comment:

Walt said...

You have a great blog.