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Anthem Blue Cross business model doomed in failing economy

Anthem Blue Cross of California announced that individual policy holders will see whopping rate hikes of up to 39%. This appears as a big win for Anthem, and is sure to open the spigot of payoff money to GOP congressmen and politicians.

Anthem justified its action as a business decision: “A higher proportion of healthy individuals are choosing not to enroll, leaving an insured pool that utilizes significantly more services.” Translation: “We are left no choice but to squeeze more money out of the remaining desperate, less healthy or older policyholders.”

Anthem’s business model is unworkable in a declining economy. The hard truth is that many of Anthem’s younger, healthier clients have lost jobs in the meltdown and have dumped Anthem because they cannot afford insurance. They were forced to take the risk of going without coverage. So what happens when the older policyholders simply cannot afford the increased cost, which are expected to double again in the next ten years?

This failing business model is one in which private insurers require an operating overhead of 25-30 percent, whereas the single payer Medicare system operates on a far more efficient overhead of less than two percent. A competitive public option would quickly drive greedy profiteers like Anthem out of business. Hooray! Do not forget, the purpose of health insurance is to provide for efficient health care, not to guarantee the profits of middleman insurers. Likewise, the purpose of banks is for general economic growth, not enriching a few elite brokers.

Joe Howard Crews

 

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