Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Health Insurance

On the Third Hand: The Real Customer

Your article was successfully shared with the contacts you provided.

A few years ago, around 2000 and 2001, it seemed as if U.S. health insurers talked a lot about commercial health plan customers and a little about their Medicare and Medicaid operations.

When health insurers did talk about their Medicare operations, it was mainly to apologize for not getting out of Medicare + Choice — the precursor to the Medicare Advantage program — fast enough, and, in some cases, to apologize for getting companies stuck in the Medicare + Choice program to start with.

The health insurers also would wax eloquently how they would never, ever let themselves rely so heavily on government program spending ever again.

It seems as if, in the health insurance universe, “forever” lasts about 11 years.

In the current round of quarterly earnings releases and financial supplements, health insurers seem to be bragging about how great their Medicare and Medicaid programs are and almost apologizing for their continued participation in the private health insurance market, even though congressional forercasters are predicting the Patient Protection and Affordable Care Act of 2010 (PPACA) will not do much to change commercial group health plan enrollment levels.

In theory, the PPACA exchanges are supposed to increase enrollment in individual commercial health insurance programs, not cut enrollment.

The idea seems to be that PPACA will put such tight constraints on commercial coverage that commercial coverage will somehow be less profitable than Medicare and Medicaid, or, at least, that the difference will be narrower than it is today, but I’m not sure if that really computes. It seems as if it would still be easier for health insurers to get commercial customers to pay more for more exciting or high quality coverage than it is to squeeze more money out of cash-strapped government health insurance programs.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.