Health insurance industry secret weapon: Swine flu

Treatment and prevention of swine flu hurts insurer profits. The timing couldn't be better

Published October 29, 2009 7:31PM (EDT)

The first time I read the The Onion report, "Obama's Declaration Of Swine Flu Emergency Prompts Pro-Swine-Flu Republican Response," I laughed (because it's darn funny), but then I cried -- because it's just not too far from the truth. Whatever Obama does, is, by GOP definition, bad. Which means satire like The Onion's cuts too close to the bone.

Republican leaders announced Wednesday that they were officially endorsing the swine flu. "Thousands of Americans -- hardworking ordinary Americans like you and me -- already have H1N1," Republican National Committee chairman Michael Steele said during a press conference. "Now Obama wants to take that away from us. Ask yourself: Do you want the federal government making these kinds of health care decisions for you and your family?"

Ho ho ho. But then I read about what the swine flu is doing to healthcare insurer profits in Brett Chase's Portfolio blog, Heavy Doses.

The cost of treating and preventing the flu is adding to medical claims, which means health insurers are reporting lower earnings this quarter even as Washington lawmakers accuse them of having inflated profit.

Declining profits might seem, at first blush, like a bad thing for the healthcare insurer industry. (Did you know, by the way, that the United States is the only developed country in the world that even has a for-profit healthcare insurance industry?) But maybe not. With healthcare reform all-but-certain, perhaps it is advantageous for the healthcare industry to take a profit hit, right about now.

More Chase:

While the flu trends are severe, they may "conveniently" have an impact on profits for the second half of this year, Thomas Carroll, a Stifel Nicolaus analyst in Baltimore, writes in a recent note to clients.

"Influenza impacts health plan profits on an annual basis, and given reform activities, (health insurance) managements may overly emphasize the potential impact," Carroll says.

Now I'm rethinking whether The Onion's report really is satire. Maybe Republicans do oppose efforts to combat the swine flu. Because, perversely, no swine flu would mean higher profits for the healthcare insurers which would mean a better chance of tougher reforms getting passed.

Ha. Ha. Ha.


By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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