Wednesday, June 03, 2009

Will WellPoint support any reform?

The insurance industry’s offer to agree to guaranteed issue in the individual market is dependent on a mandate to require every uninsured individual to purchase insurance. That would distribute risk broadly even if it doesn’t specify how such coverage could be paid for. Guaranteed issue has been opposed by WellPoint since it is not compatible with its business strategy of selling only to the healthy.

What about guaranteed issue in the small-business market? Since current proposals also would permit the continuation of the employer-sponsored market, insurers such as WellPoint would remain successful only if they could continue to use underwriting and premium flexibility in the small-business market. If they were required to issue coverage to every small business that applied, then they would have to have a mandate for all small businesses to purchase coverage. Though that would distribute risk more evenly in the small-business market, it still would defeat WellPoint’s successful strategy of keeping premiums competitive by selling their products to healthy individuals and only to small businesses with healthy employees.

WellPoint worked very hard to defeat reform efforts in California since it would have destroyed its dominance as the insurer of the healthy. There is every reason to believe that WellPoint likewise will oppose reform on a national level if Congress includes measures that would require private insurers to participate in a regulated social insurance program.


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