Democrats Plan to Bankrupt the Insurance Industry

Discussion in 'Politics' started by carpro, Mar 22, 2010.

  1. carpro

    carpro
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    http://online.wsj.com/article/SB10001424052748704304504574610040924143158.html

    Harry Reid Turns Insurance Into a Public Utility
    The health bill creates a massive cash crunch and then bankruptcies for many insurers.

    By RICHARD A. EPSTEIN

    As Harry Reid's 2,000 page health-care bill is being rammed through the Senate, most of the public debate has been focused on its expanded coverage, its now defunct public option, and its high taxes. Lost in the shuffle has been its intensely coercive requirements on health insurance issuers, especially in the individual and small group markets. Taken together, these restrictions are likely to drive them out of business and run afoul of the constitutional guarantee that all regulated industries have to a reasonable, risk-adjusted, rate of return on their invested capital.

    The perils of the Reid bill are made evident in a recent Congressional Budget Office (CBO) report that focused on the bill's rebate program, which holds that once an insurance company spends more than 10% of its revenues on administrative expenses, its customers are entitled to an indefinite statutory rebate determined by state regulatory authorities subject to oversight by the Secretary of Health and Human Services. Defining these administrative costs is a royal headache, but everyone agrees that they are heaviest in the small group and individual markets, where they typically range between 25% and 30%, without the new regulatory hassles.

    The CBO concluded that this one restriction turned the Reid bill into "an essentially governmental program." In other words, the targeted health insurers would become de facto public utilities whose profits are gutted when the huge compliance costs under the Reid bill are piled on top of the hefty costs inherent in running a labor intensive health-care insurance business.
     
  2. Salty

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    Why wouldn't you want to bankrupt those evil health insurance companies.

    Now, I'm wondering when Congress will REQUIRE all Americans to have Life insurance, a burial plot, small claims court insurance...

    Salty
     
  3. Steven2006

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    It is odd then that Aetna's stock is up so far today. Could it be that everyone being forced into getting insurance will drive up their profits?


    Just asking I haven't read enough about it to form an opinion.
     
  4. Steven2006

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    I just checked Cigna is also up at the moment.
     
  5. donnA

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    so when all these companies go bankrupt guess unemployment will rise sharply and thousands more will be out of work, all because onama deemed it to be so.
     
  6. billwald

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    Insurance companies are not required to issue any class of insurance on which they will lose money. The only true health insurance product is "major medical" policies. The rest is a pre-paid service contract, not an insurance contract. People who know what to ask for should be able to get it.
     
  7. carpro

    carpro
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    Profit taking while its still there.
     
  8. carpro

    carpro
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    It's no secret. Democrats in Washington have said plainly they want to put the health insurance companies out of business. 500,000 people working in the health insurance industry. This is the first step.

    Jobs is just not on their radar.
     
  9. Steven2006

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    If people were profit taking they would be selling their shares and it would drive the prices down. Since the price is going up people have to be buying the stock.

    If they are really now guaranteed to go bankrupt because of this bill we would see a mass selling off of these stocks, led by insiders selling while they can.

    Again, I don but know the answer, but the stock prices tell us this article might be exaggerating the outcome. Insiders who do know the facts and large mutual fund managers that would know the facts would be selling big time if true.
     
  10. targus

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    The insurance companies will see an influx of new customers due to the insurance mandate in the bill requiring everyone to have medical insurance or pay a penalty.

    It will take some time but eventually the insurance companies will be required to provide increasing coverages with the government putting a cap on premiums charged.

    In the short run the insurance companies will be more profitable.

    In the long run the insurance companies will become less profitable or operate at a loss.
     
  11. carpro

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    Who said they were "guaranteed" to go bankrupt?
     

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