Exclusive: 'Wellpoint would be a primary beneficiary' if reform fails, consulting firm says

[jefferson_dem]

Exclusive: 'Wellpoint would be a primary beneficiary' if reform fails, consulting firm says

"Of course, healthcare reform is a double-edged sword for Wellpoint shares. Should reform fail, Wellpoint would be a primary beneficiary."

That comes from the first page of the Cowen Co.'s assessment (pdf) of Wellpoint stock in 2010 and beyond. The argument is simple: Wellpoint's business model is uncommonly concentrated in the individual and small-group markets. Those are the exact markets that health-care reform will drastically change. Those are the markets where people get rejected for preexisting conditions, where insurers spend 30 cents of every premium dollar on administration and where rate hikes are volatile and constant. Health-care reform wants to change all of that, and if it does, Wellpoint's business model will be changed, too.

Wellpoint's "2.2 million individual members do leave it somewhat exposed to the 80% individual floor contemplated in the Senate bill and Federal oversight of rating action proposed by the President," continues the analysis. In English, that means the bill will force Wellpoint to spend at least 80 cents of every premium dollar on medical care for its customers, and it means that regulators aren't likely to let Wellpoint jack prices up by 25 percent with no warning or reason. It also means that Wellpoint is not spending that much of premiums on medical care and is not keeping its rates under control now. (It's possible that "rating" is referring to regulations on things like age discrimination and preexisting conditions in this context. It's not clear from the writing, but it doesn't change the point: The bill regulates those practices, too.)

There are other insurers (Aetna, for instance) that have less to fear from reform because they aren't so highly concentrated in the marginal markets where the worst practices flourish. But in recent weeks, Wellpoint has become to health-care reform what Sen. Jim Bunning is to Senate reform. Day after day, they're proving why we need reform, even if they stand the most to lose from these changes. This isn't because they're dumb. It's because their appalling practices are absolutely central to how they do their job. Threats and scrutiny aren't nearly enough to get them to stop, because they are bound to the incentives of their system. Only actual reform will change their behavior, because only reform can change the system, and thus their incentives.

http://voices.washingtonpost.com/ezra-klein/2010/03/exclusive_consulting_firm_says.html

[cutlassmama]

1. Could be why Bayh resigned. How much money is enough?

[denimgirly]

2. Cautiously Optimistic -- Could be report by a Co. paid by Wellpoint.

I would have to do more digging because all-in-all when you look at the current stuff on the table the potential end bill will actually help the industry more than hurt it. There isn't much cost control. Wall Street understands this too and ALL insurer and Pharma stocks have skyrocketed in hopes of the bill passing. Unless there is true cost control via competition (public option) or ideally just a Single Payer system then reports like this who "claim" that if reform fails Wellpoint wins is something i will take with a grain of salt.

Yes this bill is a small step but it has so many holes that it can be abused which will inevidably have ot be revisted so as to enact (hopefully) something like a public option. But that is difficult to do since it is not the desires of the people that congress listen to...btw i find that funny because statistics show that even if a congressman doesnt do what their constituents want they can still win their elections by simpy having more money to spend vs their competitor...which explains why congress ignores the 80%+ polls saying people want the public option.

[damonm]

3. but-but-but-

this bill is ONLY a giveaway to the healthcare industry...
:sarcasm:

[bvar22]

4. And if the current incarnation (Senate Bill with Obama's face) passes,

Wellpoint and the other Health Insurance Corporations will ALSO be the prime beneficiaries.

WIN/WIN for those guys now.