Short Health Insurers, Wal-Mart on ObamaCare's Public Option

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Includes: AET, ANTM, CI, HUM, UNH, WMT
by: Donald Johnson

Wal-Mart (NYSE:WMT) Tuesday joined the Service Employees International Union in backing a new law that would force all employers to subsidize their employees' health insurance.

In reaction, watch the millions of employers that don't offer health insurance to their workers come out in favor of President Obama's public option health plan.

This could kill most private health insurers.

Look for the prices of health insurers to plunge. Health insurers have seen their stock prices soar since March because the ObamaCare public option looked like dead meat. Now, all bets are off.

ObamaCare's public option will take all employers off the hook for providing health insurance subsidies to their workers.

And ObamaCare's public option will imprison all Americans under 65 who don't qualify for Medicare or Medicaid in a government HMO health insurance plan that will be more restrictive, politicized and costly than any private health insurance plan available today.

For after employers dump their workers into the government HMO, the country's 1,000-plus private insurers will lose so many enrollees that many of them will go out of business.

This will leave Congress the freedom to blackmail provider groups such as chiropractors for campaign contributions in return for new legislation that will mandate that the government HMO insure the services provided by chiropractors, dentists and all kinds of alternative care providers.

The new mandated benefits will drive up the cost of the government HMO's health insurance by 20% to 30% just as the some 1,000 health care benefits mandates imposed by the states inflate the cost of private health insurance now.

But when Congress raises the government HMO's premiums and taxes to pay for the newly mandated benefits, there won't be any private insurers around to keep the politicians or the government HMO "honest."

Only public pressure to keep costs down will check the rush to costly new mandated benefits.

And who thinks workers and patients will be able to put more pressure on Congress than the lobbyists for the special interests who want the benefits? Understand, mandated benefits are pushed by providers' lobbyists, because it's easier to run a health care practice if the government pays you regularly than if you have to collect from individual patients.

The fix is in.

My prediction is that instead of putting its competitors in a bind by having the government make them provide health insurance to their workers, Wal-Mart has set the stage for a taxpayer-supported government HMO that will worry more about containing utilization and its costs than about making Wal-Mart's employes healthy enough to return to work.

You'll hate your new government HMO 10 times as much as you hated the HMOs that made your life miserable in the 1990s until consumer and political backlashes made them allow patients better access to care.

And Wal-Mart no longer will be able to use its fairly attractive health benefits to recruit workers at low wages. They'll need better wages to pay higher taxes and live with increased inflation. And most would rather work somewhere else.

Instead of putting its competitors and unions in a corner with its endorsement of mandated employer-paid health insurance, Wal-Mart has ensured that its customers will be paying higher taxes and buying less of it's stuff.

Meanwhile, sell health insurers short. Come to think of it, Wal-Mart doesn't look like a very good investment, either.

I don't have positions in WMT or any health insurers.