Re: WLP - anybody likes this health insurers.What got my attention is that they
<<I think the sector deserves some attention.>>
could you tell me more, please? i must confess to knowing basically nothing about health insurers. my only exposure is really health business written by mainly life/annuity writers, and that perspective is not favorable. i think health care is a specialized enough field that one must be focused on it, and life/annuity writers generally are not focused on it, and so my perspective is not especially relevant here.
being a short tail line, or in some cases largely an administrative services operation, health care providers should not be subject to the concern i have about life/annuity companies -- what happens when interest rates increase and asset values decrease? you do have med cost inflation of course, but shorter term guarantees. my impression is that for the part where the insurer is taking the risk (as opposed to merely providing admin services) the real key to profitability is how med cost inflation compares to expectations. e.g., if you assume 6% but it comes in at 8%, things are not good, while if you assume 8% and it comes it at 6% everything is very nice. or has managed care basically moved this risk to the docs/hospitals?
i am also concerned about mandates. i saw an article the other day (i have no idea whether it is true or not) suggesting that the requirement for covering pre-existing conditions and the relatively modest penalties for not carrying med insurance may lead to people basically going without, and buying insurance on the way to the hospital when something comes up. Do you share this concern or see it as overblown, and why?
thanks! |
