Insurance Quotes & Advice

The Obama administration faces numerous obstacles in their effort at healthcare reform.  Despite efforts to seek bipartisan support, Republicans have been firmly against any sort of public healthcare plan and there a quite a few of the more conservative Democrats that have their objections as well.

It’s obvious the current system is completely broken, we have Medicare which will go bankrupt in a little more than 8 years as well as 50 million Americans which are uninsured which cause a massive drain on state budgets across the country.  Unfortunately there is no easy or cheap fix, as things stand now, it’s looking like the administrations current proposal will likely cost over a trillion dollars in the first decade alone.

Thus far Massachusetts has been the only state to attempt mandating universal healthcare insurance, but they are quickly finding out that the costs have far exceeded their expectations and have been forced to ask for federal support to fund their program.  With federal budget deficits expected to exceed $3 trillion over the next two years, the federal government would be hard pressed to find ways to fund such a program on a national level.

However, it is equally obvious some sort of change needs to take place, the unfunded liabilities of the Medicare program are staggering and despite previous attempts to control costs, they continue to spiral out of control.  It is at a point where annual federal healthcare costs now exceeds the entire military budget spending.

American business are struggling to pay for the healthcare costs of their workers.  One only need look to the auto industry to see how their healthcare costs put them into a distinct disadvantage with their competitors around the world.

As difficult it is to say, dealing with the growing number of uninsured has to be considered a secondary objective and it could quite possibly be fiscally unfeasible.  Something first needs to be done to control healthcare costs and any type of reform that doesn’t focus on that will be doomed to failure.

The Insurance industry is expected to be financial rocks during difficult economic periods but it’s been different this time around.  It’s been a very rough patch for many insurance companies, the main reason being deregulation in the financial services industry earlier in the decade that allowed them to seek higher profits in other areas but increased their risk profiles significantly.

AIG has been the poster child of financial mismanagement during this economic crisis, going from the world’s largest insurer to pretty much a government subsidized entity funded with hundreds of billions of taxpayer money.  Although they have been the highest profile casualty, they aren’t the only ones who are struggling, deep investment losses in many profiles have left many companies with their lowest capital reserves in decades.

On the bright side of things it looks like the bottom is in sight, we’ve seen renewed confidence in markets in the last month as investors slowly return to the fold.  However, things may take a little longer for things to get better for their customers.

Their are many people who simply can’t afford insurance anymore and that number is expected to rise over the next year.   Unemployment has risen significantly over the past year and a half, even more so over the last six months and is expected to hit double digits before all is said and done.

Stimulus payments will provide a partial boost but that won’t last long and until the economy can’t start producing new jobs once again, there will be large portions of the population who can’t make ends meet and will have to make sacrifices just to put food on the table.

Whether it’s life, health, auto or home insurance, many insurance sectors have seen their customer base shrink during the recession.  With employment one of the last things to recover after a economic downturn, it could be at least a year before things get better for their customers and a rise in policy subscriptions.

There may be a number of insurers lined up for government money, if and when they gain access to TARP funds.  There has been a renewed drive recently to include insurance companies and reports claim that a decision to include insurers may come shortly.

Still there is the question, is there enough remaining in TARP to solve the problems of the banking system, let alone help out the struggling insurance industry?  With the Treasury still conducting it’s stress test for the nation’s largest banks, it is still unclear how much more capital they will need.

To date the only insurer that has received government funds is AIG, in a massive bailout that has soured many Americans’ support for subsidizing financial institutions in danger of collapse.  The executive compensation scandal has probably done the most harm in preventing insurers from gaining access to TARP thus far.

Gaining access to that capital would likely prevent credit downgrades for a number of insurers and further erosion of their access to said credit.  The government is also likely to take equity stakes in these companies like they have for many of the banks that have already received TARP funds.

Are we likely to see the gradual nationalization of the insurance industry like what has already started to happen in the banking system?  For now it seems unlikely, for the most part the problems in the insurance industry don’t seem as widespread as is the case for the banking system, for another there just isn’t that much money left in TARP any ways.

Only a few select insurers are likely to gain approval for TARP considering that banks will get most of what’s remaining.  It is also likely that the government will have to tap into the $250 billion placeholder in this year’s budget that has been set aside for additional financial support.

For the some insurers it could mean the difference between insolvency and staying in business and they can’t wait to get in line for their handouts.