Goldman Sachs is recommending that investors buy shares in two big insurance companies, the UnitedHealth Group and Cigna, because insurance rates are up sharply and competition is down, according to this NYT report.
The Goldman Sachs analysis shows that while insurers can be aggressive in raising prices, they also walk away from clients because competition in the industry is so weak, the White House said. And officials will point to a finding that rate increases ran as high as 50 percent, with most in “the low- to mid-teens” — far higher than overall inflation.
Employers, who are in large part the victims of these insurers' growing market power don't see the pending healthcare reform legislation as a solution.
Asked by Goldman analysts about the effort to pass major health care legislation, Mr. Lewis [an insurance broker representing employers] said many employers experiencing increases in their insurance costs were nonetheless apprehensive about the president’s proposal.
“They’re very mixed in their reaction, quite candidly consistent with what we’re seeing in the polling numbers by party lines,” Mr. Lewis said. “I think most people would acknowledge that there’s a need for health care reform; employers continue to be very frustrated. So when they look at what the Obama administration and the Democratic majority state as their goals to increase access and lower cost and rail at what may be termed oligopolistic behavior of carriers in certain markets, I think employers really buy in to that message and have much of that frustration and anger at our lack of solutions.”
And yet, he said, there is little enthusiastic support from employers for the Democrats’ proposals.
“Many of them still view the legislation and the partisanship coming out of Washington as possibly the medicine worse than the disease,” he said. “So many employer groups that we’re talking to feel like it would be a shame to lose an opportunity to do something with respect to health care reform. But many are starting to feel like maybe nothing is better than something in this current environment.”
Skeptic