You Can't Have One Without the Other
- By Ritika Sharma
- Published 07/30/2011
- Insurance
- Unrated
Insurance Advice
In stark contrast to Clinton-era health reform, health insurance companies like UnitedHealth Group (NYSE: UNH) don't seem opposed to President Obama's desire for change in health care. They haven't brought back commercials featuring "Harry and Louise" sitting around their kitchen table talking about what a terrible idea this is.
But they're not sitting on their hands, either. The industry sent its lobbying group, America’s Health Insurance Plans (AHIP), to Obama's health-care summit earlier this month, and Aetna (NYSE: AET) Chairman and CEO Ronald Williams testified before Congress yesterday.
The industry basically seems opposed to two issues: If you've got the stomach for the roller coaster, there's money to be made – as long as you believe that the government isn't going to destroy the health-insurance industry while trying to fix it.
A government-run plan competing with private health securers.
Requiring the companies to accept preexisting conditions without making medical insurance a requirement.
I'm not sure the companies really have to win the first point to stay alive. Sure, the government can theoretically do it for cheaper since it doesn't need to show a profit, but let's face it -- government programs don't exactly give you
a warm-and-fuzzy feeling. There's a reason that seniors are willing to pay for Humana's (NYSE: HUM) or Coventry Health Care's (NYSE: CVH) Medicare Advantage instead of taking the free Medicare.
The second one seems like a deal-breaker. If the government tries to force health insurers to accept sick patients without requiring the healthy ones to pay up, prices are going to skyrocket -- exactly opposite of the administration’s goal. If the president or Congress tries to insist on this, I think it's safe to expect that we'll see Harry and Louise come out of retirement.
While the health securers are sitting at the table, we're a long way from a deal as far as I can tell. That means shares of medical security stocks are going to continue to look like those of Citigroup (NYSE: C), Bank of America (NYSE: BAC), and AIG (NYSE: AIG); any announcement by the government is going to have major effect on their share prices. If you've got the stomach for the roller coaster, there's money to be made – as long as you believe that the government isn't going to destroy the health-insurance industry while trying to fix it.
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But they're not sitting on their hands, either. The industry sent its lobbying group, America’s Health Insurance Plans (AHIP), to Obama's health-care summit earlier this month, and Aetna (NYSE: AET) Chairman and CEO Ronald Williams testified before Congress yesterday.
The industry basically seems opposed to two issues: If you've got the stomach for the roller coaster, there's money to be made – as long as you believe that the government isn't going to destroy the health-insurance industry while trying to fix it.
A government-run plan competing with private health securers.
Requiring the companies to accept preexisting conditions without making medical insurance a requirement.
I'm not sure the companies really have to win the first point to stay alive. Sure, the government can theoretically do it for cheaper since it doesn't need to show a profit, but let's face it -- government programs don't exactly give you
The second one seems like a deal-breaker. If the government tries to force health insurers to accept sick patients without requiring the healthy ones to pay up, prices are going to skyrocket -- exactly opposite of the administration’s goal. If the president or Congress tries to insist on this, I think it's safe to expect that we'll see Harry and Louise come out of retirement.
While the health securers are sitting at the table, we're a long way from a deal as far as I can tell. That means shares of medical security stocks are going to continue to look like those of Citigroup (NYSE: C), Bank of America (NYSE: BAC), and AIG (NYSE: AIG); any announcement by the government is going to have major effect on their share prices. If you've got the stomach for the roller coaster, there's money to be made – as long as you believe that the government isn't going to destroy the health-insurance industry while trying to fix it.
Get the latest information about free insurance advice. Find more news and updates about personal finance advice.