Ext Wants To Know Ress To Regulate Publicly Traded Health Insurance Companies

Publicly traded health insurance companies present a highly uneasy balance between various constituents. Policyholders rely on their insurer to provide timely, relevant, and cost-efficient care when needed. Healthcare is a very unique product and service offering – you could say an anomaly – in the marketplace, in that it is an extremely “high leverage” offering. When customers need the product or service, they are at the mercy of the provider. If you were stranded in a desert and you came across a lemonade stand, how would you feel if the vendor charged you $10,000 for a glass of lemonade? Or if he chose not to sell you lemonade at all?

Secondly, the insurance is also a very distinct product in thes marketplace. Individual, organizational, and systemic risk can often be difficult, if not impossible, to quantify. Policyholders are constantly paying premiums to their insurer, but the insurer must be adept and ethical enough to ensure that they have the capacity to honor their pledged policies. When customers need treatment, they absolutely need to get their care at that very time. Being a publicly traded company, however, forces the management team to cater to Wall Street’s quarterly and yearly earnings expectations. The source of these periodic performance measures are analysts from investment banks and research firms that are often wrong in the measuring stick that they hold company executives to. What happens when earnings expectations for the third quarter are unreasonably high? Does management “play games” with policyholders? Perhaps the insurer will no longer honor certain terms, or cut costs that prevent care with effectiveness and efficacy. That’s just a few examples of a dangerous balancing game.

On an additional note, since the passage of the Sarbanes-Oxley Act (after the Enron and WorldCom scandals), companies have been averse to going public due to the very significant bureaucratic and financial burdens of complying with SOX. Might this additional cost and burden cause publicly traded healthcare companies to pursue a more extreme version of cost cutting in order to protect the bottom-line? Other sectors, such as retail, telecom, and financial services, go through the occasional cost trimming as part of management’s mandates. The nature of healthcare’s offerings, and its critical importance to the lives of its customers, materially elevate the sensitivity of cost-cutting measures when lives and limbs may be at stake.

By: Michele Moore

Article Directory: http://www.articledashboard.com

Michele Moore is an internet entrepreneur and is an expert SEO. He frequently writes about SEO articles including cancer.ext.com/"> article submission,blog submission, directory submission etc. You can read his other articles only here on ext.com.