John McKown writes: >The chances of us getting a current machine depends quite a bit >on the US Supreme Court's decision on "Obamacare", especially the >80:20 rule. Which has destroyed our profitability. We basically >cannot run the company on only 20% of our policy income.
Apologies in advance for the digression. First of all, I suspect there are many readers on this list who would be delighted to collect 20% of revenue in overhead and profit. Anybody who works for a supermarket company, for example, would be thrilled with that percentage. Anybody in the financial industry as well. (Vanguard, for example, charges 0.2% to manage its typical mutual fund.) No, what's really going on in your industry is that the bigger medical insurance companies wanted several things in the new legislation, and they got them all. They wanted government fines imposed on individuals who did not buy their product. They did not want the government itself, which is much more efficient in this area (and in some others), to provide even the option of public insurance. And they themselves wanted the 20% "limit" on overhead. Why? Because if you're big, that limit automatically gives you an advantage. The bigger you are, ceteris paribus, the more efficient you will be at processing/denying claims, because the fixed costs of doing business are less significant relative to your higher volumes. So that's what's really going on, that the bigger insurance companies in your own industry are trying to squeeze out your company and deter market entry. (And don't blame the President. The new law is straight out of The Heritage Foundation's policy book and virtually identical to then-Governor Mitt Romney's system in Massachusetts.) I can assure you that "all" of those bigger companies have mainframes, and they use them. It probably doesn't help that your management has apparently chosen an IT strategy that is not known for fostering and supporting efficient growth. The costs of that IT strategy tend to grow more aggressively, more linearly, compared to the IT strategies in place at most of your competitors. During the big banking merger wave in the U.S., you could actually see this phenomenon at work. (I observed it, at least. I don't know if anyone else noticed.) In simple terms, the "mainframe" banks gobbled up the "non-mainframe" banks. Coincidence? Probably not. Anyway, I only speak for myself, and sometimes not even that much. :-) -------------------------------------------------------------------------------------------------------- Timothy Sipples Resident Enterprise Architect (Based in Singapore) E-Mail: [email protected] ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to [email protected] with the message: INFO IBM-MAIN
