The Health Insurers Saved The Day

DrRich | March 24th, 2010 - 11:43 am

Loyal readers will know that DrRich has long believed that passage of healthcare reform was inevitable – but not because the President wanted it, or because Democrats controlled Congress, or because the people wanted it. It was inevitable because the American health insurance industry absolutely needed it.

Health insurance companies find themselves at the place in their industry’s life cycle where, for the very first time, they have to try to make a profit by actually taking care of sick people. They have never done that successfully, and never will. They have tried every underhanded trick imaginable to avoid paying benefits to their subscribers, and have already raised insurance premiums to the very breaking point. But patients are getting older and sicker, and expensive drugs and medical devices and other technologies keep coming on line. The insurance industry’s profit margins (already small) are rapidly eroding. Its business model is irreparably broken. What the health insurers need more than anything else is a graceful exit strategy – whether it’s a buyout from the government, or a conversion to a public utility. And the only way they’re going to get such an exit strategy is through a fundamental reform of the American healthcare system. Hence, this is what they must have.

It is already difficult to remember how remote the possibility of healthcare reform seemed only two months ago, immediately after the election of Scott Brown in Massachusetts. Conventional wisdom at that time was that the kind of sweeping reforms the President wanted (and that we’ve now received) had become impossible. And the President himself seemed to confirm that opinion in his State of the Union message, in which he gave healthcare reform only a few, almost wistful paragraphs, and only after talking for 20 minutes about more pressing concerns. NPR’s take was, “Obama Treads Lightly On Health In State Of The Union,” and reported that the President seemed now “willing to reopen the discussion to accommodate better ideas on how to remake the nation’s health system.”

DrRich believes he was the first to point out, on February 18, that the health insurance companies, faced with a broken business model and in imminent crisis, would not allow healthcare reform to die, and must necessarily act in some dramatic way to resurrect it, and indeed – with the announcement of a 39% premium increase by Anthem Blue Cross in California – had just done so. While other, more mainstream pundits entirely missed its significance, DrRich patiently explained to his readers that Anthem’s ostensibly ill-timed announcement was actually a purposeful strategy, carefully calculated to inject new life into healthcare reform. And of course, it worked.

Now, belatedly (i.e., on March 20), lesser pundits (such as those who work for the New York Times) have come around to DrRich’s way of thinking, and have pointed to the Anthem announcement as a major turning point in the healthcare reform saga. Indeed, some reporters (who, admittedly, are even more on the fringe than DrRich) claim to have uncovered a conspiracy, in which Angela Braly (the CEO of Wellpoint, parent company of Anthem) is claimed to have actively conspired with the Obama administration to save healthcare reform.

This is an interesting allegation, but DrRich generally does not believe in conspiracies, at least, not in conspiracies which are larger than those necessary to cheat at bridge. The fact is, one does not need to invoke any kind of conspiracy here. Anthem/Wellpoint was merely acting in its own corporate best interests. If their announced rate hike proved insufficient, we would have heard of even more astounding rate hikes by other insurance companies. Whatever it took.

DrRich has been saying since 2007 that the health insurance industry, more than any other player in the healthcare system or in the government, absolutely needed healthcare reform, and needed it now, and for that reason alone, in one way or another, we would get healthcare reform.

And that’s exactly what happened.

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