Obama and the Industry
November 6th, 2008 by Jeb Foster
A week ago, a reader poll on the Insurance Journal’s web site showed that McCain had the overwhelming support of the Journal’s readership. It’s likely that support is representative of the insurance industry at large.
Indeed, the Property Casualty Insurers Association of America (PCI) has already issued a white paper that frets about the next four years under President Obama and a resurgent Democratic Party:
At the federal level, yesterday’s elections produced big victories across the board for the Democratic Party, which will have complete control of the federal government for the first time since 1994. These results will create new and sizable challenges for the insurance industry and for the business community in general … PCI anticipates that it will be far more difficult to stop several possible anti-industry moves in 2009.
Those anti-industry moves might include:
- Adding windstorm coverage to the National Flood Insurance Program
- Creating a federal natural catastrophe backstop
- Banning the use of credit based insurance scores
But it is perhaps the health insurance industry that has the greatest reason to be apprehensive–not necessarily because of anti-industry legislation, though that is a concern, but simply because of the potential for radical, disorienting change from the long-enduring status quo.
Obama’s health care plan is far from socialized medicine–private insurers play a front-and-center role–and it is not the revolution that McCain promised (his plan would’ve effectively severed the employer-health insurance link). But, if passed, it would bring about significant changes to the industry, many of which are not welcome.
For example, dragging the health care industry into the digital realm, one of Obama’s primary goals, will not happen without major investments (aka costs) and bumps along the way.
But insurers aren’t the only players in the health care system who will see some changes. An improved incentive structure will have payment to Medicare and Medicaid doctors based on the health outcomes of their patients rather than the treatments they provide. This cost-reducing initiative is great news for everyone–well, except doctors.
It’s likely that a McCain presidency would’ve been a boon for insurers–likely but not a sure thing. While we’ll never know, I suspect the Teddy Roosevelt-style reformer in McCain certainly could’ve thrown the industry for a few loops.
