<html><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; ">Economic shocks from the financial crisis bring collateral damage to the health insurance business.<div><br></div><div>The item below is from Don McCanne's Quote-of-the-day single-payer list. Within the dry business prose is a picture of working people paying more for less health care and going without health insurance in increasing numbers, as insurers battle with other financial megasaurs over dwindling cash to be extracted from the people.</div><div><div><br></div><div><br></div><div>Overall, the analogy with ecosystem collapse from predator overshoot should be apparent. But we are conditioned not to see such things. Compare <a href="http://www.sciencemag.org/cgi/content/abstract/293/5530/629">Historical Overfishing and the Recent Collapse of Coastal Ecosystems</a>, <a href="http://forests.org/shared/reader/welcome.aspx?linkid=105931&keybold=climate%2520summer%2520flooding">Is California on the Brink of Environmental Collapse?</a>, <a href="http://www.well.com/user/davidu/extinction.html">Mass Extinction Underway</a>, etc.</div><div><br></div><div><br></div></div><div><div><div>Begin forwarded message:</div><br class="Apple-interchange-newline"><blockquote type="cite"><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; "><font face="Helvetica" size="4" color="#000000" style="font: 14.0px Helvetica; color: #000000"><b>From: </b></font><font face="Helvetica" size="4" style="font: 14.0px Helvetica">"Don McCanne" <<a href="mailto:don@mccanne.org">don@mccanne.org</a>></font></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; "><font face="Helvetica" size="4" color="#000000" style="font: 14.0px Helvetica; color: #000000"><b>Date: </b></font><font face="Helvetica" size="4" style="font: 14.0px Helvetica">September 23, 2008 11:23:42 AM CDT</font></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; "><font face="Helvetica" size="4" color="#000000" style="font: 14.0px Helvetica; color: #000000"><b>To: </b></font><font face="Helvetica" size="4" style="font: 14.0px Helvetica">Quote-of-the-Day <<a href="mailto:quote-of-the-day@mccanne.org">quote-of-the-day@mccanne.org</a>></font></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; "><font face="Helvetica" size="4" color="#000000" style="font: 14.0px Helvetica; color: #000000"><b>Subject: </b></font><font face="Helvetica" size="4" style="font: 14.0px Helvetica"><b>qotd: A.M. Best revises health insurance rating to negative</b></font></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><br></div> <div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">MarketWatch</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">September 18, 2008</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">A.M. Best Revises Rating Outlook of U.S. Life/Health Companies to Negative</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">Although fundamentals for the vast majority of life/health companies</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">are currently sound, uncertainty continues to be widespread in terms</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">of the future direction of the economy, real estate values, interest</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">rates, equity markets--both domestically and globally--and liquidity.</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">All of these factors have had an impact on life/health insurers'</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">balance sheet strength and operating performance.</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">As the federal government takes unprecedented steps to promote</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">stability in financial markets and limit damage to the broader</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">economy, A.M. Best notes both the political uncertainty of the</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">upcoming Presidential election as well as the enhanced regulatory</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">scrutiny that currently pervades the life/health industry. These</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">issues are most prevalent across health insurance product lines, which</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">are influenced significantly by regulation at both the federal and</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">state levels. As a result, A.M. Best has revised the rating outlook on</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">the health insurance industry to negative.</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">With employers dropping coverage, and politicians and regulators</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">seeking ways to provide coverage for the uninsured, the individual</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">medical market has become ultra competitive. A.M. Best has similar</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">concerns with the small group medical market as large, national</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">managed care companies compete despite low profit margins.</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">Moreover, the current economic environment is placing additional</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">pressures on the managed care sector. The commercial market has been</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">extremely competitive for some time with limited growth potential.</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">Layoffs and bankruptcies will impact commercial enrollment, while cost</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">factors could pressure employees to drop coverage. Many publicly</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">traded managed care companies have increased their financial leverage</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">over the past year mainly for share repurchase and acquisitions (with</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">goodwill), all of which increase balance sheet risk. While A.M. Best</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">acknowledges that managed care companies tend to have more liquid and</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">conservative investment portfolios due to the short-tailed nature of</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">the claims, the issues that have emerged on Wall Street, and in the</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">real estate market, are expected to result in writedowns of certain</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">investments.</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; "><<a href="http://www.marketwatch.com/news/story/am-best-revises-rating-outlook/story.aspx?guid=%7B4190EA15-8E83-466A-8FD1-5C44D3E63F4A%7D&dist=hppr">http://www.marketwatch.com/news/story/am-best-revises-rating-outlook/story.aspx?guid=%7B4190EA15-8E83-466A-8FD1-5C44D3E63F4A%7D&dist=hppr</a>></div></blockquote></div></div></body></html>