Health insurance companies have a reputation for being bullies. Policyholders feel bullied when their medical claims are denied or processed incorrectly. Hospitals and doctors feel bullied when the bills they submit are refused or amended, or when procedures are not covered. Employers feel bullied when their rates go up automatically. In fact, no one is exempt from the bullying tactics of the big bad health insurance company. Their latest victim(s)—all of us!

My Way Or The Highway

Four large health insurers (Aetna and Humana and Anthem and Cigna) are trying to merge into two and the federal government has filed lawsuits to prevent that from happening. Now, the two companies that will surface if the mergers go through (Aetna and Anthem) are threatening to withdraw their plans from the public health care exchanges. It’s hard to know if Aetna and Anthem are threatening to leave the health care exchanges because they are losing money or because of the government lawsuits. But does it really matter.

Aetna and Anthem are both making moves to increase their profits and shareholder wealth. Any savings they receive by increasing their size and bargaining power with hospitals and doctors will stay with them. There will be no premium savings for policyholders, just more money for shareholders. But if these mergers do not happen, their next target is likely to be the exchanges. Because if they can’t realize increased profits by extracting bigger discounts from health care providers and hospitals, they will do it by minimizing losses on the exchanges.

Profits Without Risks

Through the individual mandate we require healthier people who need little or no health care to purchase insurance to offset the costs of care needed by the sick. Healthier people lose money by subsidizing the sick. However, health insurance companies are not willing to subsidize losses they incur on the exchanges with profits they earn from their other lines of business, like Medicare Advantage and Medicaid.

Taming The Bully

Health insurance company leaders know that they are responsible for a significant amount of wealth in this country. Health care stock values have gone through the roof since the passage of Obamacare and 401(k) and other investment saving plans reap the rewards. There’s no doubt that the economy will suffer if health insurance companies were to suddenly become unprofitable or obsolete. However, there is also no doubt that health insurance companies are in jeopardy of becoming unprofitable in the foreseeable future.

In fact, things are already looking up for the exchanges. According to a report published today, August 11, 2016, by the Centers For Medicare & Medicaid Services, Center for Consumer Information and Insurance Oversight, the individual market risk pool is increasing in size and is healthier. In other words, the exchanges are slowly adding the young and healthy individuals it always needed and wanted.

But if health insurers are unwilling to continue to work with the exchanges and insists on no losses, we should let them go and quick. And just like Michael Hiltzik proposed in his August 9, 2016, article, we should take our Medicaid and Medicare Advantage business away from them also. It’s not shooting yourself in the foot when you stand up to a bully. The economy will take a hit if we kick health insurers out of the game, but that money will eventually transfer to other areas of the economy, even if that is just increased consumer spending.

We just need to be willing to start the slow, painful process of transitioning to Medicare for All so that we don’t have to deal with bullying insurance companies that want all the good and none of the bad.

Tags: obamacare, health insurance mergers, Aetna, Anthem