Reform Won't Change Insurers' Profits Much

(CBS)  The insurance industry that was demonized in the health care debate faces a flood of new customers and tight new regulations, but when it comes to their bottom lines, it appears little will change, reports CBS News Chief Investigative Correspondent Armen Keteyian.

Complete Coverage: Health Care Reform

Under the new bill, the health insurance industry stands to gain up to 20 million new customers but will be required to:

• spend at least 80 to 85 cents of every dollar it takes in on health care
• eliminate lifetime limits on coverage and restrict annual limits
• pay at least $70 billion in new taxes beginning in 2014
• sell insurance through state-run exchanges, making purchasing more affordable for individuals

In addition, insurers will be prohibited from:

• charging older Americans more than three times what they charge the young
• canceling policies when people get sick
• perhaps most importantly, beginning in 2014, insurers will no longer be allowed to exclude the 12.6 million adults with pre-existing conditions

That last prohibition matters for people like Andrea Imhof, who has suffered from asthma and mild depression.

"I got denied twice, and I had to wait," Imhof said.

Industry leaders expressed concern about the bill, charging it does little to improve quality or contain the soaring cost of health care, which has increased 131 percent for families in the last decade, according to the Kaiser Family Foundation.

"We will have more people covered, which is good, you have greater revenues," said Dr. Jeffrey Kang, chief medical officer for insurance company CIGNA. "But on the other side, you actually have these premium taxes, which will really offset the revenue so altogether from a profit perspective, probably neutral."

More in "Users Guide to Health Care" Series:

Health Reform Tweaks Seniors' Medicare
Primary Care Doctors Ask: Is it Worth It?
Uninsured? What the New Law Means for You
Already Insured? Get Ready to Pay More
Feds Eye Big Savings from Health Reform
How Health Reform Affects Small Businesses


Even if the revenue from all the incoming customers doesn't completely offset new taxes and services, industry profits aren't expected to fall much. That's because - despite tougher regulation - any additional costs will most likely be passed on to policy holders in the form of subtle rate increases.

"There will be some modest premium increases as a result of this," said Ana Gupte, a senior analyst at Sanford Bernstein, an investment firm. "I think it will be phased in very slowly over the next decade, so it won't be something that is dramatic and clearly visible."

What is clear is all of these changes haven't worried investors. Just before the bill passed, health insurance stocks were up, a vital sign that the long-term prognosis remains strong.

More Coverage of Health Care Reform:

Summary of What's in the Law
Provisions Which Take Effect in Short-Term
Read the Text (PDF): Complete Senate Bill | Reconciliation Measure

[babooph]

Good thing lobby bribes are legal,or we would have to admit CRIME DOES PAY.....

[devilfly1]

I find it illogical to coverage children until 27 years old even though at 18 is considered adult and by 2014 we all are required to have health insurance or get fined $95, $325 in 2015, $695 or 2.5% of income in 2016! The war between Democrats and Republicans are turning our system into "currencism" which means control by just money! It is all about money and they want us to spend. We can't and not allowed to save our money. How sad is that!

[KeithDrippingSprings]

Health care reform won't affect Insurers profits much because the insurance companies wrote the legislation.

We have the best government that money can buy, both Democrat and Republican.

[askagain]

Most Americans have jobs and are doing well. We have safety nets in place for the poor. The question becomes how much should those who are doing well be expected to give to those who aren't doing well? To some of us, it is a nerve to expect us to give ever growing portions of our success to other people. We are especially offended by freeloaders. Virtually everyone in America can get an education if they want one. We can all strive to improve our skills and better ourselves. Yet, there are people who don't respond to the opportunities available to them.

[KeithDrippingSprings]

Most Americans don't have jobs. You live in the stratosphere somewhere. There is over 50% unemployment in the construction industry. That number just counts the people that are eligible for unemployment. There are another 5 million or so of independent contractors that aren't counted.

Over 20 million people collected unemployment last year and those jobs have not come back. Although the jobs lost number each week has fallen that is a long way from jobs being created.

[askagain]

KeithDrippingSprings - Your numbers are incorrect. Official government reports are around 10% unemployment. That still leaves 90% employed. Even if the actual numbers were around 16% unemployment, the majority still have jobs. Lets take it further. This country has around 300 million people. Even if 20 million people collected unemployment, a large majority still have jobs. There are millions of Americans with well paying jobs who are spending money and living as if there were no recession.

[askagain]

Most Americans have jobs and are doing well. We have safety nets in place for the poor. The question becomes how much should those who are doing well be expected to give to those who aren't doing well? To some of us, it is a nerve to expect us to give ever growing portions of our success to other people. We are especially offended by freeloaders. Virtually everyone in America can get an education if they want one. We can all strive to improve our skills and better ourselves. Yet, there are people who don't respond to the opportunities available to them.

[RobAla]

Americans were asking Washington to help bring down the cost of health care, but instead Washington took this as an opportunity to fatten itself at our expense. This bill will cause premiums to go up dramatically, and the higher taxes will result in our standard of living going down. Washington turned a deaf ear to the majority of Americans, and we will have an opportunity to set things straight come November.

[jjazman]

In order to help control costs why don't we make a change to the current system of copays. Instead of everyone paying a copay (say $30 per visit), why don't we just set up a system where everyone pays a small percentage (10% of the cost for the service). That way people are more aware of the costs. Once they hit their maximum out of pocket amount (say $1000 or $2000) then the insurance pays 100% after that. It seems like a system of copays where everyone pays the same for the service no matter what the total costs are to the system only encourages people to not pay attention to costs at all which leads to costs spiralling up.

[KeithDrippingSprings]

Why don't we just get our monies worth? 41st in the world in health care and 1st in cost, something is wrong with that. Instead of tackling the real problem or government is giving us health care.

What a bunch of crap, they will do what ever they are told by the people that pay their way so they can leave office rich. They really don't give a flying * about anybody and nothing of any substance is going to change.

[curse914]

by jgg000101 March 27, 2010 1:24 PM EDT

I am very much awake. Tell me, what has improved under obama? The healthcare plan? It's a joke. The best that can be said about it is that it's a "start". The stimulus plan? That was a joke. The economy?
It's worse than it was under bush. Unemployment? The wars? Worse. Relations with our allies? Worse. Tell me what has gotten better?

================

Nothing has changed. Until the damage done by the Gilded Age Laissez-Faire economic kooks has been undone, we are finished as a nation. Government spending is the last Bubble.

Timmy Giethner would have fit right in with the Bush presidency nicely. National Socialism did not work for Mussolini and it sure will not work for America. Mussolini did the very same thing we have been doing for 30 years. He gave his nation over to Corporate power and mortgaged Italy's debt to foreign countries in an attempt to prop up an unsustainable Corporate race to the bottom to enrich and select few.

I will be expecting a nonsensical platitude in response.

[jgg000101]

speaking of non-sensical platitudes look no further than your own post.
You showed your hand weeks ago by claiming you were a believer in Malthusian economic theory. tell me where that theory has been applied and has proven successful. Government spending is the last economic bubble? It certainly is if the government controls everything. And that ain't gonna happen. Italy isn't the United States and is incomparable in size, population, natural resources, or the economy. As far as the unsustainable corporate race to the bottom, look no further than the letters from Caterpillar, Boeing, AT&T, and Valero saying the healthcare bill will cost them between $100M to $1B. If you want to know who is driving corporations to the bottom, it's your boy wonder.
But you keep spewing your malthusian gobbledygook. And tell me how population control will solve everything.

[sjc_1]

Big corporations will shaft their workers while they make record profits and try to blame it on health care reform taking away their corporate welfare subsidies, nothing new. Most CEOs are Republicans and they will continue to loot the companies and make American workers pay for it.

[starving1968-3]

by jgg000101 March 27, 2010 1:24 PM EDT
I am very much awake. Tell me, what has improved under obama? The healthcare plan? It's a joke. The best that can be said about it is that it's a "start". The stimulus plan? That was a joke. The economy?
It's worse than it was under bush. Unemployment? The wars? Worse. Relations with our allies? Worse. Tell me what has gotten better?






The economy is worse than under Bush? What measuring stick do you use to gauge that? The Dow Jones, the unemployment rate, inflation.... ALL of it has improved under the nightmare known as "conservatives in charge".

The health care reform is far from perfect, but why don't you ask, "How much better could it be if the conservatives actually TRIED to improve the health care situation in this country instead of trying to grind the process to a halt?"

The stimulus was a joke? Not according to CBO and numerous other agencies that graded it and ranked it as "successful".
http://www.marketwatch.com/story/cbo-fights-back-at-stimulus-critics-2010-02-23

The wars are worse under Obama than under Bush? Really? How many unnecessary $3 TRILLION wars has Obama started?

[ThomasJeffersonLives]

I suppose with a username like "starving" you'll be receiving a government subsidy from the government that all of us will have to pay for.

[jgg000101]

yes, the economy is worse than under bush: unemployment, foreclosures, lower wages, record numbers on welfare, record homeless, record numbers on food stamps. Yes, the Dow has gone up but it is being manipulated by shortsellers. Investors are seeking every spike as an opportunity to get out and take their profits. Just look at the volume of trades. On healthcare you conveniently leave out the "we won" locked door, secret meetings, midnight sunday vote approach to bipartisanship. Yes, the stimulus is a gigantic failure. Look at the unemployment figures. The stimulus was supposed to keep unemployment from topping 8%. What has it done? Unemployment is higher in Ca., Fla, Mi, Az. than it was before the stimulus. The projects the money is being used for are jokes. Where's "Sherriff Joe"? "Nobody messes with Joe". I don't think Joe has a clue or cares where the money went. And yes, the wars are worse under obama. Iraq is more unstable, Afghanistan troop deaths are double what they were a year ago, yemen looms as a potential front, and pakistan is worse. As for the $3T, obama spends that between breakfast and lunch.

[ThomasJeffersonLives]

Most of the bloggers on here who want to TAX the health insurance companies to cover the cost of the healthcare subsidies are really channeling their populist anger towards greedy corporations, especially since the beginning of the current Great Recession.

And to boot, they call that anger being "Progressive" - when really they are enabling left wingers to come in and socialize our society.

Bush swung us so far to the right, that along with the stock market crash nearly 2 years ago caused a huge upswing in populism causing a great push of our country to the far left. The Liberal Democrats have taken advantage of your hatred for organizations and convinced you to have a disgust towards capitalism - thus you need to take it out on the greedy fatcats who are taking ALL your money.

Just my 2 cents...

[curse914]

You are right, buddy. Socialism comes from the bottom up. The Gilded Age idiots took to much and handed the prols an economy and nation in decline. FDR saved the Elite of his day, he was not a "traitor to his own kind", he was in fact their savior who gave the unwashed masses just enough socialism to keep them from burning the castle gates.

Since the foundations that FDR had are not in place, specifically cheap and autonomous energy, this time the villagers will be storming the gates unless attempts are made to fundamental change our economic model. The question is, will it be as bloody as the French Revolution?