"Media Buys What The Health Insurance Industry Is Selling"
During yesterday’s hearing before the Senate Finance Committee, America’s Health Insurance Plans President and CEO Karen Ignagni attempted to discourage Democrats from enacting a new public health care plan by reiterating the industry’s support for guaranteed issue — offering coverage to every applicant — and modified community rating — charging everyone the same premiums — (so long as both regulations are paired with an individual requirement to buy insurance).
Press coverage of the event centered around the insurance industry’s so-called “concessions”:
– AHIP Pleads Its Case: Regulate Us: “In a rare sight on Capitol Hill for any industry, health insurers practically begged senators Tuesday to regulate their livelihood rather than subject them to the fierce, and potentially lethal, competition that would ensue if lawmakers unleash a government-run public insurance option on them.” [National Journal, 5/06/2009]
– Insurers Offer Concession On Premiums: “Health insurers have offered to submit to a series of restrictions they contend would add up to a fairer marketplace and cut into the ranks of the 50 million uninsured.” [Boston Globe, 5/06/2009]
– Health Insurers Agree to End Higher Premiums for Women: “It was the latest concession by insurers as Congress drafts legislation to overhaul the $2.5 trillion health care industry.” [NY Times, 5/06/2009]
The industry had offered similar concessions in December 1992, before launching an all-out attack on President Clinton’s health care reform efforts. Of course, that’s not to say that insurers will adopt a similar strategy this time around. Ignagni and her team may run issue ads against certain provisions but are unlikely to oppose the entire effort.
Still, before we credit the industry for cooperating with progressive reformers, we should consider Ignagni’s proposal. The industry envisions a reformed marketplace in which everyone is required to purchase coverage. In return, insurers would no longer deny coverage to Americans with pre-existing conditions or charge sicker Americans higher premiums than healthier Americans. Women would not pay more than men and insurers would invest more in preventive care and care coordination.
But as Howard Dean pointed out in an interview with ThinkProgress, “if we only get community rating and guaranteed issue that’s great insurance reform, but that is not health care reform and nobody should mistake it.” Indeed, reforming the insurance industry is all about restoring competition. Already, “1 in 6 metropolitan areas in a 2008 study of more than 300 U.S. markets is dominated by a single health insurer that controls at least 70% of consumers enrolled in health maintenance organizations or preferred provider organizations.”
Such consolidation negates any real competition, preventing insurers from having to negotiate prices and lower premiums. In fact, while “there have been over 400 health care mergers in the last 10 years,” premiums have risen “nearly eight times faster than average U.S. incomes.” Insurers fear a public plan because it has the potential to work all too well, force private plans to lower prices and cause some enrollees to shift to public coverage. And it’s this fear that’s drawing insurers to the reform table.
A new public plan, after all, would complement the private market and offer Americans a real choice of coverage. It would also help pioneer new payment and quality-improvement methods that could set the standard for private plans and use its lower administrative costs and bargaining power to better control health care costs.
Ignangi points to the Federal Employees Health Benefits exchange — which does not include a public health option — as an example of a successfully regulated health care market. But as Jacob Hacker argues, “FEHBP’s annual growth rate of per enrollee spending averaged 7.3 percent from 1985 to 2002 (the most recent currently available data year) compared with 5.8 percent for Medicare. Indeed, the growth rate for FEHBP is virtually identical to that for private health insurance over this period.”
The industry’s so-called “concessions” are designed to protect their monopoly over the health insurance market, not lowering health care costs or offering Americans better quality care.