Health Insurance Industry Stupidity—It’s a Rout From Here On Out

Why the health insurance industry allowed itself to be put in the place they were put by the Democrats yesterday is beyond me.

With the Senate voting 70-26, and the House 383-41, to override President Bush’s veto of the bill to erase the 10.6% Medicare physician fee cut and pay for it with changes that will end the Medicare private fee-for-service program in 2011, the health insurance industry’s political stock has never been so low.

Democrats are no longer afraid of the health insurance industry and they know that most Republicans, having to choose between provider payments and HMOs, aren’t going to support the HMOs. Look for Republicans to use that strategy over and over.

This first whack at the private Medicare program is just the beginning of a rout that will take place after the elections when there will be an even bigger Democratic Congressional majority and a president that isn’t going to fall on his sword to protect the health insurance industry—McCain or Obama.

The only real political leverage the health insurance industry had going for it this year was the threat of a Bush veto of any changes to private Medicare.

The smart play would have been to cut the best comprehensive long-term deal they could this year for private Medicare while they had the Bush leverage. Instead the industry chose an all or nothing bet that pitted them against all the provider groups and AARP that, when they lost, only exposed just how little their support really is. It also did them little good not to have much of a policy defense—just why was it that private plans should permanently be paid more than traditional Medicare?

The insurance industry’s blood is in the water.

What in the hell were they thinking?