Health insurance companies will be ok but you lose. Again.

Regardless of what health reform laws pass in the next several months, health insurance companies will still be ok. They will find ways of continuing to extract premiums from business and individuals all the while maintaining their profit margins and paying fewer claims.

How do I know this? I’m watching the credit card companies.

Last week, new laws went into effect, with more coming in 2010. The credit card industry responded with a flurry of last-minute letters alerting their worst customers* of reductions in their credit limits, higher interest rates, card cancellation for non-use; the usual fare. Chase may be the worst out there, but that is only my opinion based on the letters I received from them.

Congress means well, but they don’t really think all this through because they live in a bubble. After years of building up a really awesome FICO Score, it is now in the process of being adjusted downward based on several cards being cancelled for non-use and credit limit reductions. This affects my available credit to credit used ratio. A reduced FICO Score means I will no longer have access to the best interest rates. It means an employer may not offer me that job because of a dramatic shift downward. It means my car and home insurance will go up because I am no longer in their best class of service.

But, since Congress did not foresee how the credit card companies would screw over their worst customers* and raced to protect only the irresponsible folks who were being “taken advantage of,” we responsible mutts out here who have no debt, live within our means and use credit responsibly have to live with the unintended (one assumes) side-effects. When we write contracts, we start by asking ourselves “How can the client screw us out of not paying?” and go from there. Laws need to be written from the same approach. The credit card rules also have to protect the responsible citizens.

Regardless of what the health reform laws look like, you can be guaranteed the insurance companies will resort to all sorts of shenanigans. With the open enrollment seasons of 2009, 2010, 2011 and 2012 before any changes go into effect, they will have ample opportunity to restructure your insurance plan so that it skirts the new laws and still preserves the profit margins they now enjoy. The financing will be different but the end result will be the same. Already, they are in the process of raising premiums dramatically as they are gambling there will be no “you must reduce your rates back to 2009 levels” provision in any of the legislation. Even a dog can do the math on how much cash you can milk out of defenseless small business and individuals with unregulated, annual increases of 30%+ over four years before new laws go into effect.

You lose. You’re on your own. Again and still.

*Worst customers to credit card companies are those who pay their balance off in full each month, never take a cash advance and never go over their limit. They make no money off us other than charging merchant fees for what we purchase with the card.