Health Care Reform's Impact on Health Insurers

Given the rise in health insurance companies' stock prices yesterday, Wall Street certainly thinks the health care reform bill will be positive for health insurers. I think this optimism is mostly based on the requirement that individuals obtain insurance thereby creating a new pool of customers for carriers. But the penalty for not obtaining coverage is so weak, I wonder how many people will risk paying the penalty instead of signing up for coverage? An increase in the number of people "in the pool" is critical for the elimination of medical underwriting to work. So will the insurance mandate really will be a benefit to health insurers or will it just mean that a significant number of sick people will seek coverage only when they have to because of illness?

Plus right now attorney generals from 11 states are banding together to bring suit against the federal government regarding the legality of this mandate. But if you want to eliminate medical underwriting, you have to have the mandate. More comments to follow in future posts.