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Where Will the Supreme Court Direct Health Care?



April 03, 2012 – Comments (1) | RELATED TICKERS: ANTM , CNC , AGP.DL2

Board: Value Hounds

Author: EthylMercaptan

I know that I am simplistic and dull witted, but I can’t figure out why the Supreme Court ruling on “Obamacare” is going to have the dramatic implications as some would think. I for one, have health insurance through my employer along with a vast majority of others in the nation. I also have owned a few stocks such as Wellpoint and Centene in the past as well as Amerigroup at present.

Over the past decade there has been a constant hand wringing that these insurers were not going to be able to keep up with expenses with higher premiums when in fact they have done quite well. Now there is a belief that the court is going to strike down the individual mandate and hold the insurers to the accepting the pre existing conditions and this will in turn bankrupt the insurers. Really? As long as the pre existing conditions are distributed across the whole industry, it really does nothing to the industry since they all will elevate premiums to every insurance consumer.

To me the insurance companies are the modest reward, low risk, and as easy as falling off a log investment to make in the healthcare industry. I know people are fascinated with some new fangled drug that will cure diabetes or some new hybrid powered mechanical blood pumping device, but what they really fail to realize is that when these new products are sold; not only does the company that brought it to market reap the rewards but the insurance company also takes their cut as they bump premiums on everyone else. It doesn’t matter where the cost come from in the healthcare industry; drugs, devices, equipment, wages, or the electric bill. The bill always comes back to the consumer and right before the consumer is the insurer and they always take their cut.

There are two major risk to insurers. The first one is a government run health plan and the second is that Americans will stop smoking, eat healthy, and exercise. I’ll take my chances on either of those happening. ;-)


1 Comments – Post Your Own

#1) On April 03, 2012 at 1:43 PM, leohaas (29.99) wrote:

The health insurance industry lobbied for this law because it will get them about 50 million new clients they otherwise would not have had. So if the mandate is struck down, the insurers will not get those new customers, and will have to adjust their growth predictions accordingly. I would not want to hold any of the health insurers on the day the Supreme Court strikes the mandate.

You mention two major risks for the insurers. Americans ditching their unhealthy lifestyle is indeed not in the cards, and neither is a government run health plan. But if the "government run health plan" would be implemented along the lines of Medicare Part C/D, then this would be a major boon to the health insurers. If you look at the available options right now with a little over 10 million elderly folks enrolled in Part C (all profitable, because an insurance company can choose to do business on a per-county basis), just imagine what "Medicare Part C/D for all" would do for the industry...

PS  I work in the industry.

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