Wall Street meltdown not good for your health

HMSA, the Blue Cross representative in Hawaii and the largest health insurer in the state, lost $19 million on health care operations in the third quarter. Investment income made up for that with $5 million to spare, something that isn't likely to happen during the current quarter. Kaiser, the largest health maintenance organization in the state, lost $400,000 in the same quarter even after counting investment income. The connection between the Wall Street meltdown and the health care crisis is that HMOs and health insurers have long relied on investment income to make up the difference when income from premiums fall short of need. The long stock market boom that has now ended produced paper profits in your 401k, and, though much of that wealth has evaporated, you may be sanguine about it if you aren't retiring tomorrow and can afford to wait for a resurgent market to recreate that wealth later on. But HMSA and Kaiser were cashing in that wealth on a regular basis to make up the difference between their costs were not covered by your premiums. Even with that cushion, HMSA last summer hiked premiums for small businesses 10%, and it specifies in Tuesday's quarterly results that it is considering requesting another rate hike. And your employer will pay it, and when part of it has to be paid by you, you are going to pay it, because this isn't a vacation to Vegas, this is your health we're talking about, and it's not like they're wasting the money, they're keeping you alive despite your bad diet and your lack of exercise and you don't even remember to floss half the time for crying out loud. The original idea of using investments as a cushion was that you might misjudge the amount of money you needed and request too small a rate hike, or the insurance commissioner might misjudge it and deny that one you put infor, or there might simply be an unforeseen problem, a flu epidemic or something. Investment income would solve that until rate hikes could catch up. But somewhere along the line, all sides began to see that investment income as covering part of the rising cost of health care, and goodbye to all that.