If the Healthcare Bill Becomes Law, Will Any Private Company Write Policies?

If your answer is “Yes, private companies would still write health insurance policies”, then please tell me, “Why would they?”

Once the rules change so that companies writing new policies have to write them for all applicants including those with pre-existing illness and disability, is that really insurance?

Isn’t that just harnessing up the shareholders of the corporation to pay the ongoing costs of the applicant with an existing illness of disability?

Why would the shareholders to that? What would be in their heads? What would their business model be?

Maybe something like “Oh yes, we get to pay the costs of this applicant’s illness or disability, and look how much money we will be able to give to help that applicant. Then we can fail to breakeven, and become bankrupt and see our shares go to zero value, oh that would be fun, how wonderful!”

When I got my MBA, I never saw a company with a business model like that. AIG may have had that, but they weren’t doing it on purpose.

Keep in mind that after the rules change, the old policies can stay in place. The old “book” of existing contracts can become the entire insurance business of the corporation. As long as they don’t write new policies, they don’t have to take all comers and insure people with pre-existing illness or pre-existing disability. They don’t have to go into the charitable payment for sick people business, which doesn’t seem a very smart business model for a profit seeking corporation.

Ceasing writing new health insurance won’t put these companies out of business, but continuing to do so surely will.

So, they will apply their talents to other forms of risk-related trading. The Cap and Trade Bill, if it is enacted into law will create a vast market for pollution permissions. These will be actively bought and sold by firms that have experience in forward projection of financial values — like health insurance companies. It’s an Enron style business. Then there’s also fire insurance, liability, flood, inability to work insurance, long-term care, all sorts of elements in the risk projection business that could be smoothly integrated into their business models to replace writing new health insurance policies, and would be.

So the public option would become the only option for persons seeking health insurance who don’t already have a policy.

How would that work? That’s the Bad Business Model company, and it would work by massive draws on the Federal Treasury until the moment when Congress realizes that it made a huge mistake, and that the Federal government is bankrupt because of operating a business that is well and truly not sensible.

When would that happen? It would only take about two years for the Congress to figure this out.

What would they do?

They would have to close down the public option companies.

So what then?

Then nobody can get health insurance from any source.

You mean the private corporations would not get back into that business?

Right, I don’t think they would. Once burned, twice shy.

So with no health insurance, would healthcare costs be lower for the average American family?

They might be, as long as nobody in that family got sick. But the number of bankrupt families due to unexpected health problems would go up dramatically.

Would this be better than what we have right now?

No, it would not be better.

Is there a good reason to enact the Healthcare Bill?

No, there’s no good reason to do that.