Could the problems at a Florida health insurer do to the health insurance market what problems at Countrywide did to mortgages?
Since the raid, WellCare has been named in class action complaints, a whistleblower lawsuit, and it's dealing with problems on both the federal and state regulatory level.
The financial impacts are starting to look Countrywide-like. Moody's has downgraded the company's debt, and given its dominance in markets like Jacksonville this could be a real problem for the whole industry.
At issue are questions of self-dealing, specifically accusations patients were referred to a clinic WellCare owned. Its top managers have been pushed out, and WellPoint is looking like the best bet to take it over.
The question which must be asked is whether this is an isolated incident. The constant pressure to both cut costs and raise profits may be forcing many companies to do what WellCare did.
When the "subprime mess" hit, markets were assured that the problems were isolated and manageable. They weren't.
Are the problems in health insurance isolated or systemic? [poll id=12]