Where in any area of business must the profitable company subsidize or shore up a competing unprofitable company? Sounds counter-intuitive, right?
The new $1.1 trillion temporary government spending authorization bill that Congress passed just before getting out of Dodge (for Christmas) includes a provision that requires the U.S. Department of Health and Human Services to use money from profitable health insurers — and only cash from profitable insurers — to buffer insurers against poor individual health insurance underwriting performance. In other words, if one health insurance company gets the gooey end of the lollipop, the government will confiscate cash from a profitable company and make it all better. The law prohibits HHS from using other funding sources to help health insurers that have weak insurance underwriting performance.
Well, isn’t that special! It would be unthinkable to force Boeing, for example, to buffer Airbus if Airbus suffers an unprofitable experience.
It would be front page news if Macy’s were made legally responsible to help out Target, with a cash infusion, if Target has a bad year.
What about where you work? If your restaurant is doing everything right and business is great, what would you do if the government said you need to forfeit cash profits to shore up your competitor?
Think of your architectural firm, dental office, car repair garage, plumbing shop, salon, hotel.
And yet, the government is forcing profitable insurance companies to cough up cash profits to make sure the unprofitable insurance companies don’t go bankrupt.
Welcome to income redistribution.
Richard Ek
Everett
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