What is the ‘death spiral’ of the health insurance industry?
Health insurance companies are losing billions of dollars a year because of the government’s new rules to cap health spending and provide coverage to everyone.
The industry is already struggling financially and the new plan would add even more pressure.
But what is the death spiral for the industry?
An industry expert says the insurance industry’s bottom line could be in jeopardy if the federal government follows through with the new rules.
The federal government has introduced a new system to cap how much money health insurers are able to spend on health care services.
They are not allowed to spend more than $8.5 billion on health services in a year, which will cover most people.
But a number of experts say the new system would have a devastating effect on the insurance business because it would force many insurers to stop offering health insurance.
“The loss of millions of dollars of revenue that they would otherwise have would be very detrimental to the industry,” said Bruce Mancuso, president and CEO of the Insurance Information Institute.
“That is going to make it very difficult to sustain the industry for years to come.”
Mancusos analysis found that health insurers would have to drop their business and sell fewer products, and they would be forced to pay millions of more people in premiums.
“If you look at the number of people that would be losing coverage and the number that would have insurance, you would be seeing some very, very big consequences for the health care industry,” Mancos said.
In addition, the health industry would be left with fewer options for patients, because they would not be able to choose what to pay for.
“It would be a very, extremely difficult business to run,” Mancheus said.
Insurance industry officials say they are not worried about the impact of the new regulations on the industry.
“We are confident that this is not a threat to the health of our industry,” says Anne-Marie Lefevre, executive director of the Canadian Association of Health Plans.
But the industry has been a target of the Conservatives’ plan because it is the largest employer of Canadians.
It is estimated that over a million Canadians are covered by private health insurance and that this number has doubled in just the last five years.
“I think that is just the beginning of this,” said Mancsons co-author and University of British Columbia economist, Jennifer Blais.
“For a lot of the insurers, the new restrictions are going to have a very negative impact on their bottom line.”
The new rules are expected to come into effect on July 1, 2019.