Which Way Will They Go?

by digby

The proposed Senate health bill is getting a good going over and I’m sure we’ll all know the good the bad and the ugly before too long. Unfortunately, this is yet another small step to completion. They still have to vote, then it goes to conference and then both houses have to vote again. And each step is like having a fingernail slowly removed. Let’s hope it’s worth it.

The only thing I know at this point is that Wall Street hates it, and that’s probably a good sign. Some of the the money that’s going to health industry shareholders is going to go toward covering citizens instead. They naturally aren’t going to like that but it’s better for the health of the country in a million different ways.

There have been two analyses recently made public about the financial health of the health care sector after reform. The first by McKinsey and Co doesn’t suggest Armageddon by any means and pretty much says that after some adjustments the industry is going to do just fine. Certain areas will actually improve while others will shrink a bit, but nothing cataclysmic will happen — except more people will be covered.

Today another analysis appeared (pdf)called The Time Has Come to Kill This Bill which notes that the insurance companies have huge cash reserves and suggests that they will gouge their customers as much as possible before the reforms take place in order to build them even higher (much as the credit card companies are doing right now.) This will result in insurance becoming unaffordable for even more people and businesses in the short term which will be a good thing for the insurance industry. In the event of passage, it would seem they think the best way to protect their profits going forward is to make their customers so miserable that the government will be forced to repeal the act, a la Medicare Catastrophic.

So there you have it. Either the insurance companies are going to listen to McKinsey, which says that everyone will make out just fine under the new regime and not to panic or they will listen to those who not so subtly suggest that they screw their customers as hard as they can and build up as much cash as they can to keep fighting the reform.

I’ll leave it to you to decide which path you think they’re likely to take.

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