During the White House Health Summit, AHIP CEO Karen Ignagni told the president, “we understand that we have to earn a seat at the table…you have our commitment, to play, to contribute and to pass health care reform this year.”

Indeed, this year, the industry has portrayed itself as a proponent of comprehensive health reform and its health care proposal has generated a slew of positive media coverage. But some still question the industry’s sincerity. Will AHIP support health care reform that lowers the industry’s profit margins, and will the insurance industry sacrifice profits for progress, these critics ask?

The industry’s opposition to Illinois State Representative Gregg Harris’ (D-Chicago) effort to pass legislation regulate the individual insurance market may begin to answer these questions.

Recently, the Illinois House passed ‘The Health Insurance Consumer Protection Act (House Bill 3923),’ a bill designed to regulate the state’s ‘Wild West’ individual health market. The act requires insurance companies to “spend at least 75% of premium dollars on medical care rather than on executive salaries,” establishes an office to conduct “external independent reviews of denied claims and rate increases” and simplifies “the complicated application process for both individual and small group markets by creating a standard application.”

ThinkProgress spoke with Harris, who explained that while the insurance industry initially supported his efforts, it opposed the actual legislation:

It’s the same kind of language they’ve talked about at the national level: “We could be supportive of some of this stuff if there was an individual mandate,” and “we’re willing to talk and negotiate and talk about parts of the bill.” But when it came time for the vote, they were out in pretty strong opposition. Every procedural trick in the book was used to stall it and derail it on the last day, but we got it through.

Listen:

Reform on the national level “is going to be very difficult,” Harris explained. “You’re really going to have to stand up to some powerful interests to get done and people are going to have to make a decision. Where are your votes going to be as a legislator? Are they going to be to protect consumers, or are they going to be to protect an industry giant?”

The Health Insurance Consumer Protection Act will now move to the Senate where, Harris predicts, “the opposition will be just as strong.”

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The Lewin Group has released a new report that “examines potential impacts that a public health plan might have in competing for enrollment with the private insurance industry.” The report models “several variations on the public model” but the short conclusion is this: millions of Americans could abandon private insurance and enroll in the new public plan:

- 30% lower premiums in public plan if the public program used Medicare rates of reimbursement.

- 32.0 million Americans would leave private insurance and enroll in a new public plan under limited eligibility rules

- 10.4 million people would switch to the public plan if the new program used private payer reimbursement levels and only offered coverage to small employers, individuals, or the self employed

- 119.1 million Americans would leave private health insurance if the public plan used Medicare payments and was opened to all employers

The 119.1 million number vindicates advocates of the public plan. If the public program relied on Medicare reimbursement rates, it could charge premiums up to 30 percent less than premiums for comparable private coverage. But the political conversation has moved towards a model that establishes a level playing field for private and public insurers and provides a public option to those Americans — individuals, the self-employed and small employers — who currently lack choice.

Still, Lewin’s numbers deserve some healthy scrutiny. The firm assumes that “the public plan would be implemented as part of a health reform program” of greater insurance regulation and access to coverage, but it does not capture the reaction of the market place.

In other words, Lewin assumes that President Obama’s health reforms would eliminate medical underwriting and health status rating; it does not predict how private insurers would react to a new public competitor. Would they offer lower rates, design plans with greater flexibility or create some other incentives to retain customers? Lewin doesn’t say.

The keys here are competition and choice. Conservative critics will surely hijack the study to argue that ‘millions of Americans will lose their health insurance coverage,’ but the reality is much more democratic: if millions of Americans are not satisfied with private insurance and believe that a public option would offer better quality at lower costs, then they will stop rewarding private insurers for providing expensive inferior coverage.

But public opinion surveys also undermine Lewin’s assumptions. While 73 percent of voters support having the choice of a public plan, 80 percent of Americans questioned in a CNN/Opinion Research Corp. survey said “they’re satisfied with the quality of health care they receive.” Ultimately, if we level the playing field and force private insurers to compete with a new public option, Americans will have the choice of enrolling in a new public plan and it will be up to the private insurers to beat the public competition.