Amy Lotven of Inside Health Policy is reporting that health insurers are now 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:

The insurance industry is urging the Obama administration to at the very least create a transition process that would phase-in the health reform provision that allows insurers to charge older people no more than three times the amount they ask younger people to pay for premiums. Insurers are concerned that the age-rating provision, slated to go into effect in 2014, will result in “sticker shock” for young people, America’s Health Insurance Plan’s Karen Ignagni said recently.

In 85 percent of the states, the average age rating band is about 5:1 or 6:1, Ignagni said during a panel session at the National Business Coalition on Health’s recent conference in Washington. That means that older people on average are charged five to six times what younger people pay. In those state, premiums will be affected “overnight,” she said.

The age-rating limit by itself is worrisome to insurers, but even more so because it comes in addition to the tax on health insurance plans and a weak insurance mandate that penalizes those not purchasing insurance with a $95 fine in 2014, she said. When all of these policies are compounded, it creates a “major issue” and threatens the ability to get costs under control, she says.

Insurers urged Democrats to stretch out the age-band to 5:1 back in September of 2009. “If age bands are narrowed or ‘compressed’ too much, premiums will rise significantly for these individuals, making coverage unaffordable, and resulting in a smaller and less stable pool, and higher premiums for everyone,” the industry warned. And it’s the same argument they’re making now. But does it have any merit to it? Probably not.

If you think about the economic make-up of most young people, you quickly realize that a good number will actually pay less for coverage because they’ll qualify for subsidies and possibly even Medicaid. The Center on Policy and Budget Priorities (CBPP) estimates that nearly 75% of young adults (under 30) now with individual market plans have incomes below 400% of poverty, as do 85% of young people who don’t have insurance. In fact, 54% of those earn below 200% of the poverty line and would qualify for sizable premiums credits/cost-sharing reductions or Medicaid. Many young people under 30 will also be able to purchase a catastrophic plan which would have a deductible of about $6,000 and much lower premiums.

As CBPP’s Edwin Park put it to me in an email, “If anything, the premium and cost-sharing subsidies and the individual mandate would significantly increase participation among young adults and improve the risk pool (young adults, as one would expect, because of their income and their generally good health are the most likely to be uninsured), easily outweighing any negative effects due to age rating on young adults and limiting premium instability due to having age rating limits for older adults.”

He added, “This is really about wanting to delay lowering rates for older adults and enrolling a higher risk population (as age can be a proxy, albeit an imperfect one, for health status) , at the same time insurers won’t be able to adjust premiums based on health status in 2014.”

I disagree with Kate Pickert’s argument that Fox News was right to re-brand the “public option” the “government option” because the latter phrase did a better job of explaining what the “option” actually did than the former. Responding to today’s revelation that Fox News executives sent emails to reporters reminding them to stick to the “government” descriptor, Pickert argues:

Here’s what Kurtz and Media Matters fail to note: Most Americans did not understand what the “public option” was. The term, in fact, seemed almost intentionally non-descriptive. Scores of journalists asked me during the health care debate to explain to them what the public option was – and these were folks interested in the news and paying attention to the issue.

The public option would have been a government-run insurance plan some Americans could have purchased. It would have been supported by premiums with no government subsidization and would be been purely voluntary. Like Medicare, the reimbursements paid by the public option would have been set by the government. Also like Medicare, the plan would not have needed to turn a profit, making it cost less than private insurance. It would have therefore provided tough competition for private insurers and pushed down premiums throughout the marketplace.

It’s true that Americans had a hard time understanding this and all the provisions in the Affordable Care Act. In fact, that’s part of the reason why its approval ratings are so low. But Fox News has always contributed to the misinformation. The network chose to call the the “public option” the “government option” not because it was hoping to educate Americans about the intricacies of reform, but because it was in the business of broadcasting the most sensationalistic and over the top claims about reform — claims that almost buried the entire effort. Multiple times! And ‘government option’ fit the bill since, as Frank Luntz put it, “using “government option” language made the public option unpopular with the American public.

In her column, Picker offers this clear definition of what the public option actually is: “The public option would have been a government-run insurance plan some Americans could have purchased,” she writes. “It would have been supported by premiums with no government subsidization and would be been purely voluntary. Like Medicare, the reimbursements paid by the public option would have been set by the government. Also like Medicare, the plan would not have needed to turn a profit, making it cost less than private insurance. It would have therefore provided tough competition for private insurers and pushed down premiums throughout the marketplace.” What’s instructive is that Fox News never explained it this way. Rather, through its use of the word “government,” selection of guests and general framing, the network insinuated that it would cause people to lose their existing coverage and lead to the death of private insurance as we know it.

In fact, this message was so successful that Fox, Republicans and the whole conservative movement used the “government takeover” meme even after the public option was dropped from the bill and people still say it today. That’s a testament to the network’s reach and influence, not its educational prowess or knack for clarity.

In Deadly Spin, insurance insider Wendell Potter describes how insurers rely on public relations firms to handle moments of crisis. The industry brought on APCO to discredit Michael Moore’s SICKO, worked with PR companies to shape their message during the health reform debate and consulted these companies when dealing with a death of a beneficiary to whom it had denied treatment. As Potter explains it, these groups have the contacts and the know-how to distribute industry talking points to editors, columnists, think tanks and reporters in a way that distorts their origin and boosts their legitimacy.

This approach is very effective in shifting public opinion and perceptions. The final health care law was fairly similar to AHIP’s original plan and it’s likely that the industry’s attack ads (funneled through the Chamber of commerce) and slew of negative made-to-order reports about reform probably had some impact in shifting the bill further to the right. With that said, it’s troubling to see that the industry is now re-grouping and looking for new PR representation as it moves into the all-important implementation phase of reform:

Five of the nation’s largest health insurance companies are taking a key step toward building their own inside-the-Beltway coalition to influence implementation of the new health law and congressional efforts to change it. The companies – Aetna, Cigna, Humana, UnitedHealthcare and Wellpoint – are shopping around Washington for a public relations firm to represent them, according to a source familiar with their work. Public Strategies and APCO are among PR firms that have spoken with the insurers, the source said.

“They plan to go public,” the person said. “They spent a ton of money [in 2009 on lobbying and the election] and liked being influential and they don’t want that to go away.”

The unfortunate thing for advocates of health reform is that with a Republican Congress — which came into power with the help of contributions from the industry — influencing the debate shouldn’t be terribly difficult, particularly when HHS is already “expanding quality bonuses to Medicare Advantage plans that receive only average quality ratings.” Agreeing, in other words, to the industry’s demands before they even settle on their PR representation. Imagine the other provisions insurers will be able to successfully water down if there isn’t serious push back on Capitol Hill and the advocacy community.

Rep. Darrell Issa (R-CA)

The Wall Street Journal’s Alicia Mundy has this report pointing out that now that the elections are over, Republicans are clamoring to cut out unnecessary medical spending in Medicare — something they had previously referred to as “rationing” and likened to “death panels.” Darrell Issa (R-CA), the incoming chairman of the House Committee on Oversight and Government Reform, is a big fan:

“If I can help every senior get the same care they’re getting and still save tens of billions of dollars and have no doctors cheated out of what they’re entitled to, what’s not to like?” he said. [...]

Mr. Issa said his own doctor told him that surgeons have an incentive under Medicare to implant many joint and bone screws to support patients’ spines, when fewer implants—or none at all—might be equally effective and safer.

“They have got to come up with a system that doesn’t reward people for putting more metal in somebody’s spine,” Mr. Issa said.

Under current rules, Medicare cannot consider cost-effectiveness in its coverage decisions. But Mr. Issa said it may be time to consider costs as well as efficacy, as long as medical decisions are made by doctors, not by “bureaucrats” in government. “My committee can help by looking at whether the government is answering and informing about the lowest-cost, least-invasive procedures,” he said. [...] “Republicans have to step back from the words ‘death panels,’ ” Mr. Issa said.

The Affordable Care Act puts us on a path to paying providers for quality rather than quantity of services and tries to encourage efficient care. Republicans put on a great stink about the law’s investment in comparative effectiveness research, the results of which, they argued, should not be used to make coverage decisions. In this story, Issa is siding with Don Berwick in saying that we need to consider these kinds of solutions if we ever hope to change the inefficient fee-for-service model.

In fact, for all the brouhaha over Berwick and comparative effectiveness and rationing, Issa’s comments highlight just how uncontroversial all the ideas behind those labels (like payment reform and changing the incentives in the health care system) really are. They faced opposition because they came from a Democrat named Barack Obama and were successfully neutered and watered down into what is now a very very moderate piece of legislation. Too bad Issa didn’t tell us until after the fact that he actually wanted to go even further and is now pushing to defund and repeal the entire operation.