Forget Repeal: How Insurers Really Want To Change The Health Law

The health sector has kept quiet throughout the GOP’s futile effort to repeal the Affordable Care Act in the House, saving its ammunition for the more serious campaign of changing and tweaking parts of the law. This morning Karen Ignagni, the insurance industry’s chief spokesperson, offered a glimpse into what insurers will be lobbying for in the months and years ahead. She hinted that the industry isn’t interested in repeal and is instead focusing on the following issues. Watch it:

Let’s go through it piece by piece:

- Eliminating new taxes on the health insurance industry: Beginning in 2014, the health law imposes an annual fee on the health insurance sector, but Ignagni refers to this as “an unprecedented sales tax on small businesses and individuals” — “a health care sales tax.” Unless the industry offsets the increase through innovation, some of the costs may be passed down to employers and employees — but both of these groups will be receiving tax credits to offset the purchase of coverage. Generally speaking, in a law that pays for its coverage expansions and reduces the deficit, somebody has to pay more if others get more.

- Wants to charge younger people more for insurance: Ignagni claims that “anyone under 40 would see a huge increase” in costs and the industry has already been lobbying the Department of Health and Human Services to adopt a transition period for the age-rating provision of the Affordable Care Act. Under the law, beginning in 2014, insurers will have to guarantee coverage to everyone who applies and charge older people no more than three times what younger individuals would pay. But the industry is saying that if it had to adopt that change instantaneously in January of 2014, younger individuals would face big price increases. This argument isn’t particularly convincing, however, since many young people will actually pay less for coverage because they’ll qualify for subsidies and possibly even Medicaid. That will significantly increase participation among young adults, improve the risk pool, and probably outweigh any negative effects due to age rating. My post on that here.

- Essential benefits packages should be very narrowly defined: Ignagni claims that “if the essential benefit package is so broadly structured that these individuals and small businesses are going to find that the current proposals are unaffordable and they’re going to have to buy up, that is going to be a third leg of the stool in terms of cost increases. ” While there is a reasonable argument that regulators shouldn’t overfill the minimum benefit package and give insurers flexibility in design, you don’t want them to have so much flexibility that they can “continue to compete based on risk-selection, rather than price and quality as intended by the ACA and what is critical for a better functioning health insurance market.” My post on that here.

During the interview, Ignagni was also asked about Wendell Potter’s new book criticizing the industry and its PR practices. Ignagni — who Potter describes in the book as an incredibly effective spin-master — said she hadn’t read the book and didn’t address Potter’s accusations.