To Aaron, the solution to the "dirty business" lies in the health reform bill that passed the House of Representatives and in the reform legislation under consideration by the Senate.
The legislation would, under threat of financial penalty, encourage more people to buy health insurance coverage. The healthy people who sign on as a result of such a plan, Aaron said, would help companies compensate for the high costs they face for covering the sick.
But insurance companies themselves have come out against the House bill. The lobbying group America's Health Insurance Plans has argued that the bill, which stops insurers from denying coverage due to pre-existing conditions and limits age-related variations on premiums, will ultimately increase health insurance costs for American families.
Regardless of whether the reform bills become law, Stifel Nicolaus' Carroll said, insurance companies face a tough road in the months ahead.
Rising unemployment is leading more Americans to rely on COBRA coverage, which is more costly to insurers because those who elect COBRA coverage are typically less healthy than those who choose to go without.
Companies are also continuing to set aside reserves to pay for claims related to the H1N1 virus, commonly known as the swine flu.
The increase in Medicare and Medicaid rolls are posing additional challenges for the long term. Carroll said doctors, hospitals and other health care providers charge higher rates to privately-insured customers to compensate for the relatively low reimbursements paid by the government for consumers covered by Medicare and Medicaid.
As more and more in the graying U.S. population enroll in Medicare, he said, that problem will grow worse.
"As we look into the next couple of years, no matter what reform looks like, government is going to be a bigger customer," he said.