Friday, April 13, 2012

Faust Visits the Insurance Lobby

Insurers are concerned that the Supreme Court will strike down ObamaCare's individual mandate, which provides them with a steady new supply of mandated and subsidized customers.  Without it, ObamaCare gives them less than they bargained for: new rules to comply with, profit caps and price controls with no corresponding advantage.

Those who place more trust in free markets than in government omniscience, and who despise crony capitalism for the self-serving hypocrisy it is, can be forgiven for thinking that it serves them right.

Consider the insurers. America's Health Insurance Plans (AHIP) started promoting something vaguely resembling the Affordable Care Act as long ago as 2006, and a very close resemblance in 2008. Lobbyists always need to manage political risk, but AHIP CEO Karen Ignagni's support gave ObamaCare a big early lift. The trade group now stresses it opposed the final bill, though that opposition came too late to stop the political momentum that it helped to create. 
The best we can say is that the insurers behaved better than the drug companies and their lobbyist Billy Tauzin, who sold out to the White House for a song and bear a large responsibility for the bill... 
The insurers aren't alone. Moody's Investor Service put out a research note on for-profit hospitals this month arguing that losing the mandate "would limit operators' revenue growth and profit margins and constrain cash flow." The American Medical Association is still waiting for the permanent "doc fix" of higher payments it was promised three years ago in return for supporting ObamaCare. 
These companies, professions and industries may not be compensated after all in return for for having betrayed their erstwhile principles, the country, liberty and the Constitution in the bargain (whether the Supreme Court acknowledges it, or not). The Journal's Review & Outlook editors opine that there's a moral to the story worth committing to memory:
[T]here's a larger lesson here for all CEOs as they cope with an increasingly intrusive government. Washington reps and lobbyists will typically suggest that they can cut a sweetheart deal that saves their company or industry from the worst, but the politicians win when they can play divide and conquer with business. 
Business stood up in united fashion against union card-check and won. In health-care the lobbies looked out mainly for themselves, and the companies are now living with the ugly consequences. It's called a Faustian bargain for a reason.
Perhaps leaders of the Business Roundtable will someday learn what members of the Chamber of Commerce instinctively know. The devil doesn't make good deals with anyone.

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