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Vermont Wants Aetna, Cigna and Other Health Insurers Dead

Stocks in this article: AET CI UNH WLP HUM

NEW YORK (TheStreet) -- A single-payer health care system is coming for Vermont starting next year with full implementation in 2017.

Under a single-payer system, there is no role for health insurance companies such as Aetna (AET) and Cigna (CI) as the government pays all the medical bills. Many hope that the United States will implement a single-payer system. But there are unyielding factors as to why the stakeholders in Aetna, Cigna, UnitedHealth Group (UNH) and others have few worries.

A major reason is that there is not the political courage to cut the pay for medical doctors.

In single-payer countries such as Canada, Norway and others, physicians make much less than those in the United States. That is the only way to make a single-payer system economically feasible. In Canada, the pay for medical doctors is about 50% lower. In Norway, it is nearly two-thirds lower. Salaries for virtually all medical professionals, not just doctors, would have to be greatly reduced for a single-payer system to work financially in the United States. Overall, physician pay in the United States is nearly 80% higher than in other nations.

Next, there is not enough political capital for single-payer supporters to take out the health insurance industry.

There are many, such as Senate Majority Leader Harry Reid (D-Nev.), who contend that the Affordable Care Act, or ObamaCare, is a major step toward a single-payer system for the United States...bzzzzt! Wrong! 

ObamaCare has beefed up the strength of the health insurance industry. Millions of new clients have been added. Billions in subsidies were just granted to health insurers by the Obama administration to keep premiums lower. Overall, the health insurance industry is much stronger as a result of the Affordable Care Act. Much weaker now, as a result of the Veterans Administration scandal, is support for government-run health care.

The most important consideration is that it would be political suicide for far too many members of Congress to cripple the American economy by voting to wipe out the health insurance industry.

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