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Insurers Fought Health Law, Now Profit From It

January 10, 2012
Written by: , Filed in: Practice Management
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Health insurance companies spent tens of millions of dollars trying to stop the health care reform law, and now the law has turned out to be a financial bonanza for them.

So says a Blooomberg Government study released last week. A Bloomberg news story quoted Peter Gosselin, the study author, as saying:

The industry that was the loudest, most persistent critic of this law, the industry whose analysts and executives predicted it would suffer immensely because of the law, has thrived.

Gosselin is senior health care analyst for Bloomberg Government. He said the insurance industry has thrived because it changed its business model. The five largest insurers have moved away from standard commercial coverage and toward providing services to Medicare and Medicaid patients—running managed-care plans for Medicare and administering benefits for Medicaid, for example.

“Only by substantially reshaping their businesses can they profit,” the study says.

Profit they have been doing. Bloomberg reported that health insurers contributed $86.2 million to the U.S. Chamber of Commerce to oppose the Patient Protection and Affordable Care Act. In the six quarters since the law’s provisions began taking effect, the five largest insurers have seen their averaging operating profit margins increase to 8.24 percent, compared with 6.88 percent for the six quarters immediately preceding the law’s passage.

Those five largest insurers examined in the study are WellPoint, UnitedHealth Group, Aetna, Humana, and Cigna.

The industry itself isn’t so sure those profits will continue. After reading the study, industry spokesman Robert Zirkelbach said:

We remain very concerned that major health care reform provisions that go into effect on January 1, 2014, will raise costs and disrupt coverage for individuals, families, seniors, and small businesses.

Zirkelbach is a spokesman for America’s Health Insurance Plans, the industry’s Washington lobbyist.

And, yeah, we don’t feel too sorry for the insurers either.

Still, Gosselin said the new business model carries risks. The law could be ruled unconstitutional in whole or in part. Congressional opponents could block or refuse to fund certain provisions. State insurance rules could change.

But for now, the industry should be very happy that it wasted $86.2 million.

Related seminar: The Business of Radiology

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