Monday, December 29, 2014

US Health Insurance Giants to Battle for Supremacy in the 2015 Crony Awards

So Congress went ahead and passed the "Affordable" Care Act that we could find out what's in it....and now that we know, it's pretty clear that it's not so great at making health care "affordable" . It's pretty bad, actually - and soon to get worse - for doctors . In fact, it's even worse for patients

So who is it good for? Richard Lenzner gave us a pretty good clue back in late 2013 here

So far in 2013 the value of the S& P health insurance index has gained 43%. Thats  more than double the gains made in the broad stock market index, the S & P 500.  The shares of CIGNA are up 63%, Wellpoint 47% and United Healthcare 28%. And if you go back to the  early 2010 passage of ObamaCare, you will find that Obama’s sellout of the public interest has allowed the public companies the ability to raise their premiums, especially on small business, dramatically multiply their profits and send the value of their common stocks  up  by 200 % - 300 %...

We warned you back on December 4, 2009 in my blog ” The Horrendous Truth About Health Care Reform” that the Obama White House was handing a “ free ride for the health insurance industry” that would allow premium hikes of 8%-10% a year by CIGNA, Humana HUM -0.41%Aetna AET -0.1%UnitedHealth Group UNH -0.21% and Wellpoint, and as well  a $500 billion taxpayer subsidy, a half trillion dollars without any requirement that the health insurers had to spend the subsidy on medical care...
At the time I wrote, Goldman Sachs  research operation  estimated that the 5 giants would increase profits by 10% a year from 2010 to 2019, sending their shares up an average of 59%. In truth,  the shares of CIGNA and some others are up a multiple of several times since the  contest was resolved by a very tight vote in early 2010...." ( it should be noted that the current stock price of each of the above companies is well above *100%* of what it was is 2013... )
And so, in 2015, with insurance companies flush with cash, perhaps there will be a precipitous drop in health care premiums as companies pass their windfall profits along to their customers? Not according to the below NY Times article:
"The Obama administration on Friday unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases next year — in some cases as much as 20 percent — unless they switch plans.

The data became available just hours before the health insurance marketplace was to open to buyers seeking insurance for 2015..."
To what do US health insurance companies owe their extraordinary profits? To life-saving discoveries? Productivity- enhancing innovation? Exemplary, competition -crushing customer service and satisfaction?  No, in a word, to "cronyism".  

For a look at the sordid face of on-going health insurance cronyism since the run-up to ObamaCare :

"Our story begins just days after Obama’s landslide victory over Sen. John McCain (R-AZ) in 2008. Sensing an opportunity to increase profits at taxpayer expense, Karen Ignagni, the president of America’s Health Insurance Plans (the trade association that represents the health insurance industry in Washington), quickly signaled that she was ready to do business with the new occupant of the White House.
“No one should fall through the cracks of our health care system,” Ignagni’s November 11, 2008 statement read. “Universal coverage is within reach and can be achieved by building on the current system.”
That last phrase, “and can be achieved by building on the current system” was the health insurance industry’s top priority in the beginning of the Obama administration. And they spent furiously to make sure Obama would protect them. Despite the worst recession since World War II, businesses spent more than $1 billion lobbying on health reform in 2009, a sharp increase from 2008.
Blue Cross/Blue Shield led the league in lobbyist spending, shelling out $15.13 million in 2009, up more than 25 percent from 2008. AHIP shelled out another $8.85 million, while United Health Group added $4.86 million, and Aetna Inc. spent $2.84 million.
These millions turned out to be very wise investments. Health industry lobbyists secured dozens of meetings in the White House throughout 2009 and 2010. They not only met with Obama’s top advisers, but also Obama himself.
These meetings had a very clear impact on the policy that Obama would eventually produce. During a June 24, 2009 ABC News town hall meeting on health care, Obama assured the CEO of Aetna: “Aetna is a well-managed company and I am confident that your shareholders are going to do well.”
And Aetna has done more than “well” under Obamacare. Its stock price has more than doubled, and almost tripled, since Obama publicly promised the company it would “do well” under Obamacare.
And when you look at the basic outline of Obamacare, you can see exactly why. The program forces every American to buy the health insurance industry’s products and also subsidizes those purchases to the tune of more than $1 trillion over just the next decade alone. No wonder health insurance industry stocks are booming.
But the relationship between the health insurance industry and the Obama administration did not end on March 23, 2010, the day Obamacare was signed into law. If anything, it was just beginning...."
The good news is that now, you can potentially win $1000 and help your health insurance executive and/or elected representative get the recognition he or she deserves- by nominating him for the 2015 Atlas Shrugged Crony Awards
"Crony capitalism is not true capitalism. What we have today is a system in which government intervenes in every sector of the economy, through subsidies and regulations, creating opportunities for businesses to profit from government favors. 

No business today can avoid dealing with government. Still, there’s a difference between those who aim to create goods or services and succeed through market competition, for whom the struggle to navigate the shoals of regulations and permissions is a sideline; and those for whom deals with politicians and bureaucrats are the essence of what they do. Not always an easy distinction to draw. But the Atlas Shrugged Crony Awards are intended to spotlight the clearest and most egregious cases of these “political” entrepreneurs.

Cases of cronyism involve a business on one side, government on the other (often with a lobbyist or other middle-man). The Contest is open to both sides of that equation. To qualify for the contest, nominees should meet the following criteria:
     Business: The business lobbies to create and benefit from a special government subsidies, tax breaks, or other privilege or regulation limiting competitors. And the business promotes and benefits from favoritism with government officials.
     Government: The politician or other official uses discretionary power to confer a benefit on a business in expectation of personal benefit, or in a manner that is covert and based on a special relationship with the business.
In short, Crony Capitalism is an effort to seek gain through government rather than the market."

The person who first submits the entry that becomes the final winner will receive $1000 and free admission to the 2015 Atlas Summit in Nashua NH.