Inside Financial Services

We’re From The Government. Trust Us.

What JPMorgan Chase's mortgage settlement ought to mean to health insurers

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I trust the people who run the nation’s health insurers are paying proper attention to JPMorgan Chase’s $13 billion mortgage settlement. I won’t bore you with the details of the sins that Morgan is now atoning for, but just remind you of one fact about them: the vast majority of those transgressions were committed by Washington Mutual and Bear Stearns, two failing institutions Morgan acquired in 2008 at the government’s request. Yes, yes, I know, both deals were coups for Morgan. The bank did just fine. Still, at the time of the Bear Stearns deal, the S.E.C. provided an informal assurance it wouldn’t hold Morgan accountable for any lending abuses it later might uncover. As for WaMu, Morgan thought its contract with the FDIC precluded any retroactive litigation.

How’d all that work out? I’ll even stipulate that, regardless what other agencies might have promised, the Justice Department did the right thing in going after JPMorgan Chase. A grievous wrong has been righted, and presumably future bad behavior has been deterred. Score one for the good guys.

Still, if you’re a health insurer contemplating issuing non-ACA-compliant health policies now, what’s going through your mind? The Department of Health and Human Services isn’t rewriting the rules as to what constitutes a grandfathered policy, remember. Rather, the Obama administration is merely promising that it won’t go after you later for writing health care policies that are manifestly illegal. Not so long ago, these same plans weren’t merely being characterized by the White House as non-compliant, but instead as substandard “junk” coverage.

One wonders how they’ll be judged a year from now. Judging by what JPMorgan Chase has just gone through, one can’t be too sure.

What do you think? Let me know!

8 Responses to “We’re From The Government. Trust Us.”

  1. rivvir

    “Not so long ago, these same plans weren’t merely being characterized by the White House as non-compliant, but instead as substandard “junk” coverage.” Nothing’s changed that classification. Like taking out a minimum required $10g auto insurance coverage when 10g’s pays for the other guy’s tow after you demolish his car. Problem is the i t for the aca means they’re also now classified as “better something than nothing” for the meantime. “One wonders.” That may be true. But one wonders a lot of things about a lot of things. Doesn’t stop us from playing in the stock market or elsewhere. Or stop us from much of anything.

  2. Ken Greenberg

    Hopefully, they’ll learn from this debacle and resist. I’ve spent the last ten days contacting Congress and the media about the cancellation letters our small business GROUP plan got 10 days ago. Finally, we’re seeing some coverage. The Federal government is too big and too intrusive. This isn’t good. At least yesterday the media started covering how small group policies are now being cancelled.

    Let’s be clear about something: we pay about $500 monthly for a single in our health coverage. There’s nothing substandard about the policy. We looked on the NY Small Biz exchange. The Bronze plan is similar in price, but with twice the deductibles, co-pays, out-of-pocket – all of it. The Platinum Plan is similar in coverage to what we have now, but double the premium. ALL of them – including Platinum – require a referral from a primary care physician before you can see a specialist. We haven’t had that nonsense in 10 years. From my point of view, the policies on the NY Exchange are substandard to what we have now. That’s the travesty.

    We’re going to buy coverage outside the exchange to eliminate the referral requirement…. but at what price?

  3. Pete

    You are pre-supposing that the administration is actually genuine in their willingness to let Insurance companies offer the old non-ACA-compliant health policies. If they were genuine, why would the administration threaten a veto of either ,or both, the House or Senate bills that would give legal cover to the industry if the insurers were to comply with the presidents public requests to extend the old policies,

    Besides the reason that you highlight (the risk that the DOJ will come after your company or you at some point in the future), the healthcare companies shareholders would revolt as it would be a clear giveaway of shareholder value.

    I would contend that the administration knew from the beginning that the Healthcare insurance industry cannot / will not offer these non-compliant policies, but that the point was to create a political narrative so that the insurance industry, rather than the administration, would become the lightning rod for public anger.

    As per usual in the current political climate, it is all about public perception or as they used to call it “Smoke and Mirrors”.

  4. stays72

    Dimon admits he had no such agreement: “We didn’t anticipate that we would be paying anything for prior losses for Bear Sterns,” Dimon said, adding that he asked the Securities and Exchange Commission for assurances that it wouldn’t be punished for problems at Bear Sterns. “We did ask. We weren’t completely stupid…They couldn’t [give assurances] outright, but they did say they would take into consideration the circumstances in which the transaction took place.”
    So what is your point? That if you know you don’t have an agreement you should be outraged a year later when you realize you don’t have an agreement?
    What an absurd article!

  5. rivvir

    Grover, “From my point of view, the policies on the NY Exchange are substandard to what we have now.” 1) What conditions made your plan be classified as substandard. 2) forgetting the need for referral simply for the purpose of this post, If the bronze plan you note is double the premium, which entity is responsible for that, the insurance company or “the administration”? Why is it double the price? Because more sick people get to keep their coverage in the private system? Because more healthy people are forced to buy coverage even though they think, “it can’t happen to me”? Sorry, but i can’t accept your complaint on face value, but i’m sure it would take a book length explanation to tell me why, and the place for that is certainly not here. Maybe you’d need even a treatise as long as the explanation of the aca program itself. For now i’ll stick to focusing on the problems signing up and what that means in terms of canceled coverage. By the way, i guess no one wanted to use the phone system to sign up. Last i heard, that’s working without any problems, and has been all along. Of course, if everyone turned to that system there’d probably be delays to the moon. Just like trying to use the irs phone number. Cutbacks. You get what you pay for, like 3 hour waits, phone call and office visit @.

  6. Strongboy

    The Feds and States Attorneys General are salivating In anticipation of another industry to crush. After all the Administration now blames the insurance companies for the failure of the ACA. The Feds did not cancel the policies, the insurances companies did. Just inconvenient that the policies cancelled were non compliant with the untenable ACA.

  7. andy

    nothing in ocare will fix any of the real problems, just one more trap in destroying the health care system so o can take over claiming only single payer big govt plan will solve the problems he created by desugn.

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