When All Else Fails

Here's a novel business plan: If your customer isn't interested in paying full price for services anymore, just figure out how to save the customer money so they can afford you.

And when your customer is The United States of America, there's probably plenty of wasteful spending to point out. In fact, UnitedHealth Group (NYSE: UNH  ) thinks it's identified $540 billion in health-care cost savings that the government could reap over the next 10 years if its suggestions are implemented.

Insurers like UnitedHealth, Humana (NYSE: HUM  ) , and Coventry Health Care (NYSE: CVH  ) are dealing with a miniscule increase in Medicare Advantage payments next year and are worried that their margins are only going to get cut further as President Obama attempts to overhaul the health care system. UnitedHealth clearly wants its hand in what the reform will look like.

Hopefully the idea doesn't spawn changes at other businesses. I don't need my barista at Starbucks (Nasdaq: SBUX  ) giving me tax deduction advice.

Ironically, UnitedHealth could be potentially helping its future competitor. The government hasn't decided what to do with the 50 million uninsured Americans, but one of the proposals is to set up a government-run plan that would compete with private plans from companies like Aetna (NYSE: AET  ) , Cigna (NYSE: CI  ) , and WellPoint (NYSE: WLP  ) . I don't think the industry will have too much trouble competing with the government -- many people will be willing to pay higher prices to not be in a government-run program -- but it's still ironic that UnitedHealth might be helping its future opponent.

Investors -- myself included -- are having a hard time assessing exactly how much risk there is for the health insurers. Many are trading at single-digit price-to-earnings ratios, but they're only ridiculously cheap if the government doesn't cut margins considerably, which could result in lower earnings. UnitedHealth's actions should give investors confidence that the company is actively trying to shape the reform, but whether that'll be enough remains to be seen.