Yesterday, America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association formally announced that the insurance industry would be willing to charge every American the same price for health insurance coverage in the individual insurance market if the government protected its market monopoly, required all Americans to purchase their insurance product and held off on the new public health option:
Specifically, by enacting an effective, enforceable requirement that all Americans assume responsibility to obtain and maintain health insurance, we believe that we could guarantee issue coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market. While we support transitioning to a reformed system in which health-status-based rating is no longer used, rating flexibility based on age, geography, family size, and benefit design is needed to maintain affordability.
You’ll recall that one of the main criticisms of Sen. John McCain’s (R-AZ) health care plan was that it shifted too many Americans into the unregulated individual insurance market, where higher risk patients — women, older Americans, those with pre-existing conditions — could be charged unsustainable premiums. In December, AHIP promised to reform the market by providing everyone with coverage if everyone was required to purchase insurance, and has since argued that it supports the President’s vision for health care reform.
The media has happily amplified their message. Today, the New York Times, USA Today and the Washington Post framed AHIP’s announcement as an unprecedented concession — the industry coming to the table in good faith to reform the health care system and save the American worker from skyrocketing health care costs:
– “Tuesday’s proposal marked one of the first concrete steps forward in the process.” [USA TODAY, 3/25/2009]
– “Tuesday’s proposal, included in a letter to Senate leaders by the industry’s two main trade groups, is the latest move by health insurers to position themselves as constructive participants, rather than obstacles, in the debate over how to overhaul the U.S. health-care system.” [WSJ, 3/25/2009]
– “The industry’s flexible position on the issue came as a surprise to lawmakers, and could make it easier to reach an agreement in Congress because it narrows the issues on which insurers are ready to fight the Democrats who control Congress and the White House.” [NYT, 3/24/2009]
But it’s unclear what exactly AHIP is conceding. For one, the industry made very similar “concessions” in December of 1992, promising to “provide the standard package ‘regardless of a person’s medical history’” and work with the government to “stabilize health-care prices” if everyone was required to purchase insurance. This latest proposal is, for the most part, just a regurgitation of past efforts — proposals the industry rejected once the administration proposed an actual plan.
And, this time, AHIP has nothing to lose. They’re asking the government to protect and even increase its monopoly over providing insurance to Americans under 65 and to strengthen safety net programs that would siphon off the poorest (read: sickest) Americans.
In turn, insurers will charge their new clientele the same rate. But the industry did not rule out charging different rates “according to age, geography, family size and plan design.” That means that a person in a wealthier area (who is generally healthier) could be charged a lower price than someone from the inner city (and in poorer health). Ignagni likes to argue that the stakeholders must show “leadership” in the health care reform debate; she doesn’t often discuss the financial sacrifices the insurance industry is willing to adopt to bring about reform.
The LA Times’ Michael Hiltzik points out:
Ignagni can afford to be gracious because no specific reform plan is yet on the table. But veterans of the last reform battle warn that the moment concrete proposals appear, the insurance industry will deploy in force to kill anything that threatens its profitability and freedom of movement, such as an expansion of public insurance programs or tighter federal regulations.