Declining customer base for insurers means declining companies?


Slate has an article that is interesting. Are current health insurance companies a doomed model anyway?

The declining numbers aren’t simply a function of job loss. A Bureau of Labor Statistics study released this week found that in March 2009, only about 70 percent of private-sector workers had access to employer-provided medical care benefits, “and only 25 percent of the lowest wage earners—those with average hourly wages in the lowest 10 percent of all private industry wages—had such access.” Note the difference in the data between the public and private sectors. For government workers, 88 percent have access, and the participation rate is high. For private-sector workers, 71 percent have access, and the participation rate is lower. What accounts for the difference? It’s unclear. But at least for single employees, the government picks up more of the tab (90 percent, compared with 80 percent for private sector jobs). For family coverage, the split is the same, 70-30, in both the public and private sectors.

In fact, there’s pretty good evidence that government spending is all that stands between the struggling insurers and complete disaster. Look through the insurers’ earnings reports, and you’ll see that a portion of the loss in commercial business has been offset by growth in Medicare and Medicaid programs. At UnitedHealth in the past year, for example, enrollment in its public programs rose from 6.185 million to 7.115 million.

The system of employer-provided health care coverage is crumbling before our eyes, and for more Americans—and for more American insurance companies—government-funded health care is all that separates them from financial disaster. A Gallup poll found that the percentage of Americans who say they get their health insurance from an employer has fallen from 58.9 percent in January 2008 to 56.5 percent in May 2009, while the percentage who get it from the government (Medicare, Medicaid, VA benefits) has jumped from 26.5 percent to 29 percent. (The rest purchase it on their own.) But this poll understates the case. About 17 percent of payroll jobs today are government jobs. Crunch the numbers, and it’s more like 39 percent getting insurance from government sources (public programs and public-sector jobs) and about 47 percent from private-sector jobs.

Simply by doing nothing, we’re slowly nationalizing health care.