You Can't Have One Without the Other

But they're not sitting on their hands, either. The industry sent
its lobbying group, America’s Health Insurance Plans (AHIP), to Obama's
health-care summit earlier this month, and Aetna (NYSE: AET) Chairman and CEO Ronald Williams testified before Congress yesterday.

The industry basically seems opposed to two issues:

• A government-run plan competing with private health insurers.
• Requiring the companies to accept preexisting conditions without making health insurance a requirement.

I'm
not sure the companies really have to win the first point to stay
alive. Sure, the government can theoretically do it for cheaper since
it doesn't need to show a profit, but let's face it -- government
programs don't exactly give you a warm-and-fuzzy feeling. There's a
reason that seniors are willing to pay for Humana's (NYSE: HUM) or Coventry Health Care's (NYSE: CVH) Medicare Advantage instead of taking the free Medicare.

The
second one seems like a deal-breaker. If the government tries to force
health insurers to accept sick patients without requiring the healthy
ones to pay up, prices are going to skyrocket -- exactly opposite of
the administration’s goal. If the president or Congress tries to insist
on this, I think it's safe to expect that we'll see Harry and Louise
come out of retirement.

While the health insurers are sitting at
the table, we're a long way from a deal as far as I can tell. That
means shares of health insurance stocks are going to continue to look
like those of Citigroup (NYSE: C), Bank of America (NYSE: BAC), and AIG (NYSE: AIG);
any announcement by the government is going to have major effect on
their share prices. If you've got the stomach for the roller coaster,
there's money to be made – as long as you believe that the government
isn't going to destroy the health-insurance industry while trying to
fix it.

 Copyright © 2009 Universal Press Syndicate.