Insurers are cashing in on the health-care law already
Dear Mr. Berko:
Health insurance stocks have been making new highs. How can this be, when Obamacare will change how insurance companies do business and how hospitals and doctors bill patients? Though I don’t like Obamacare, my broker believes the health insurance industry will make more money under this plan than it does now and has recommended that I invest $5,000 in Cigna, UnitedHealth, Aetna, WellPoint, Coventry and Humana. Please tell me what you think. Meanwhile, my wife doesn’t believe that members of Congress and their families are exempt from Obamacare. We have a wager on your answer. I say they are exempt, and my wife says they are not.
R.P., Rochester, Minn.
Dear R.P.:
It’s not correct to call our health-care bill “Obamacare.” Our president should not get all the credit. This legislation, though encouraged by President Obama, is really a caring, collaborative effort by 535 members of Congress who were concerned that Americans are being treated unfairly by the health-care industry. Without them, it never could have happened.
The bill’s real name is the Patient Protection and Affordable Care Act (PPACA). Frankly, without its passage, our health insurance companies would not be raking in the lucre now overflowing their coffers. And passage of the PPACA is the reason health insurance stocks are setting record highs, receiving record premiums and making record earnings. The health insurance industry aggressively supported passage of the PPACA, contributed huge sums of money to ensure passing votes and helped inform the public that the PPACA was essential to their health. In return, Congress gave insurers a free pass to raise premiums, reduce coverage and pay enormous salaries.
In 2010, for instance, UnitedHealth Group Inc. increased revenues 9 percent, raised premiums 18 percent, grew net income by 26 percent, boosted its dividend fourfold and then paid CEO Stephen Hemsley the equivalent of $103 million in compensation. No wonder UNH and Steve contributed so copiously to congressional war chests.
And though the CEOs of Aetna Inc., Humana Inc., Coventry Health Care Inc., WellPoint Inc. and CIGNA Corp. don’t earn as much as Hemsley, their pay scales are soon to zoom as their revenues and earnings find the federal mother lode to nobble the market. So the talk on the Street is that most insurers have uncommon potential for gains in the next few years.
The Street thinks the revenues and earnings of CIGNA, WellPoint, UnitedHealth, Humana, Coventry and Aetna should continue to grow enormously. With the blessings of Congress, these insurers will continue to make even more money under the provisions of the PPACA. These companies have been awarded a license to steal.
And yes, according to page 144, line 22 of the PPACA, members of Congress and their families are exempt from its provisions – as they should be. Our congressmen and women should be above the niggling paperwork, the bothersome co-pays, the crowded waiting rooms. They must be allowed to choose the best doctor and the best hospital, rather than their insurer picking that doctor or hospital for them.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or email him at malber@adelphia.net. ©2011 Creators.com
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