Insurers Stuck with Black Hat

Poor Karen Ignagni. No matter how hard she tries, the president and CEO of America’s Health Insurance Plans can’t escape being cast as a villain in the health care reform debate.

This year, AHIP tried to play a proactive role in health care reform, instead of just reflexively opposing it. Insurers understood, she said, that they “needed to earn a seat at the table,” Ignagni said.

So AHIP announced it would support legislation that would ban insurers from denying coverage to people because of preexisting conditions, as well as bans on other practices that might make good business sense but have devastating consequences on people who can’t get affordable insurance as a result.

There was one condition, however, on AHIP’s support for these health insurance market reforms: They must be coupled with a requirement that all individuals obtain health insurance. That would bring into the risk pool millions of healthy Americans who now opt not to pay for insurance. This would help lower premiums for everyone.

It also would give insurers millions of new customers, but the goal of health care reform is to get everyone covered, right?

The Senate Finance Committee weakened the individual mandate, however. Its bill, which is set for a committee vote Tuesday, would exempt millions of Americans from the mandate and impose only light penalties on those who aren’t exempt but choose to ignore the requirement.

As a result, millions of Americans would continue to go without health insurance: 25 million in 2019, to be exact, according to the Congressional Budget Office. That’s a pretty high number of uninsured, even for a bill that only costs $829 billion over the next decade.

Letting so many people remain out of the market is one reason why the bill would cause health insurance premiums to rise at a faster rate than they would without health care reform, according to a study AHIP released Monday.

The study, which was conducted by PricewaterhouseCoopers, cited three other provisions in the bill that also would lead to higher premiums: a new tax on high-cost health insurance plans; cost-shifting to private plans as a result of Medicare cuts; and new taxes on health insurers, pharmaceutical manufacturers, and medical-device makers.

Critics quickly challenged the study’s assumptions, as well as AHIP’s motives.

“If you think the insurance industry is concerned at all about premiums going up, Bernie Madoff probably has a golden investment opportunity for you,” said Tom McMahon, acting executive director of Americans United for Change. “No one should be surprised that at the 11th hour, the private health insurance industry has pulled out all the stops to block health insurance reform.”

Other critics pointed out that subsidies provided by the federal government would shield most people from any premium increases, and that the increased competition provided through new health insurance exchanges would keep a lid on costs.

Senator Jay Rockefeller called AHIP’s report “politicking for corporate gain at its worst,” and said it provides further justification for creating a government-run option to provide competition to private insurers.

A White House spokeswoman said AHIP’s study was “self-serving.”

Of course it was self-serving. What self-respecting Washington lobbying organization wouldn’t be self-serving? It’s their job. It’s the public’s job, and their representatives in Congress, to weigh the claims of various lobbyists and figure out how best to serve the broader public interest.

For businesses—the providers of health insurance to most Americans—the main issue in health care reform all along has been cost. They don’t want reforms that raise costs instead of lowering them—even if it lands them on the same side of the issue as those greedy insurance companies.