Insurance Industry Deals with Upcoming Legislation

Democrats in congress are targeting the health insurance industry as culprits in the attempt to bring about healthcare reform. What has turned into a political brawl is quite different from what took place during the recent Bush administration, when Republicans depended on insurance companies to help provide health care at reduced costs.

Institution of expanding the federal Medicare program for the elderly and disabled to include coverage for prescription drugs, in 2003 the Republican-led Congress permitted insurance companies to provide private drug plans for Medicare patients only with government oversight.
Paul Heldman, an analyst with Potomac Research Group says that Republicans viewed insurers as the way to bring market reforms to government-run health care. are says that the Democrats are taking a completely opposite approach. He says that they are distrustful of the insurers.

With tens of billions of dollars in annual revenues available, health insurers are obviously ripe targets.
For example, in the year past, UnitedHealth accumulated about $81.2 billion in revenues and WellPoint acquired nearly $61.6 billion, followed by Aetna with nearly $31 billion and Cigna taking in about $19.1 billion.
When it comes to net profits, however, the companies present far lower figures.

According to Oppenheimer & Company’s Carl McDonald, who follows the managed care industry, in 2008 overall, publicly-traded insurers saw more than $11 billion in profits.

As a means for comparison, McDonald says, the five largest U.S. pharmaceutical companies reported net income in 2008 of $35 billion. So that means that these five companies accomplished last year in just over three months accumulation of the same amount of profits as the entire health insurance industry did during the whole year.

In spite of this, in addition to rival public plans and exchanges, insurers will probably witness significantly more regulation.
White House spokesman Reid Cherlin says that the administration has been discussing in specific terms what health insurance reform can be expected to be like for American families. One of the most important benefits, he says, will be ending the discrimination of dropped coverage gaps that may be found throughout today’s health insurance system.

If Congress sticks with proposed mandates on individuals and possibly employers, in spite of the political feuding, insurers are likely to benefit from a wider pool of customers. There are also other possible gains. These are in terms of expanded coverage of the poor through the joint federal-state Medicaid program for the poor and, even with more regulations and lower reimbursement, more customers overall,.
A health care analyst for Washington Analysis Corp, Beth Mantz Steindecker sees it as becoming a volume game for the insurers.
When the debate began earlier, insurance company stocks took a hit. But now these same stocks have experienced some rebound. For example, the S&P Managed Health Care index of large U.S. insurance companies is up about 10 percent this year. This means that it is only slightly underperforming the wider S&P index.

Verbal barbs are most likely to continue between the industry and the Democrats, at least until Congress reconvenes in September, but a compromise is eventually possible.