The Obama administration and the insurance industry: partners

Robert Pear at the New York Times has noticed something:

After squaring off as political foes for more than a year, the Obama administration and the health insurance industry have suddenly discovered that they need each other.

Both have huge stakes in the success of the new health care law.

Pear’s article is well worth a read, and I will discuss his very important analysis soon, but I want first to mention what he leaves out:

This law makes it illegal for Americans to not buy insurance. It also subsidizes private insurance. Plus, it requires employers to help pay for employees’ insurance. It also leaves in place the tax favors for employer-sponsored insurance, which protects the industry from competition. And the regulations placed on insurers — the industry supported the biggest of those regulations before Obama even took office. In short, this bill was not an anti-insurance bill, as the Times admitted right as it passed.

But returning to Pear’s point about the Democrats and the insurers now being on the same boat:

Both have huge stakes in the success of the new health care law. The political fortunes of President Obama and Congressional Democrats depend on their ability to translate its promise into reality for voters, by reining in health costs and making insurance available to everyone at an affordable price.

Likewise, the financial future, indeed the survival, of the health insurance industry depends on the government — on regulations being written by federal officials and on hundreds of billions of dollars in federal subsidies to the insurance companies to cover low- and middle-income people.

This is the recipe for corruption and cronyism. The insurers will now hire even more Democratic lawmakers and staffers as lobbyists and contribute even more to politicians. Democratic politicians will tweak the law and its implementation to make sure the insurers are strong enough deliver what the politicians want.

Beltway ConfidentialUS

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