Play With Fire, Get Burned

Posted by John LaPlante in Insurance Regulation on Nov 11th, 2009 | no responses

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Insurance companies engaged in a little pay-to-play, but it’s the rest of us who are going to suffer. From an editorial in the Wall Street Journal:

We have little sympathy for the insurers, or for that matter most of the other medical providers who signed on to this process only to claim now to be appalled by the result. The insurance lobby—led by Aetna CEO Ron Williams—made the Faustian bet that it could trade new regulations for more new subsidized customers who would face a tax penalty if they didn’t buy their insurance. The Pelosi bill includes the regulation but guts the tax penalty because it’s unpopular. Insurers will thus have to cover more sick people with fewer dollars, as healthy folk opt out of coverage until they are sick.

This writing was on the wall months ago, but the insurers chose to play an inside game rather than shape public opinion. Judging by their weekend statement—criticizing the House bill but vowing to seek “bipartisan” reform—they will now throw themselves at the mercy of the Senate. Good luck with that. The real victims are their customers, most of whom will pay more for insurance as the new mandates raise costs.

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