Why Antagonizing Insurers Could Backfire

The health insurance industry announced yesterday that it would accept new HHS regulations clarifying that “children with medical problems can get coverage starting this year.” Insurers had previously said that the new law “does not require them to write insurance for the child and it does not guarantee the ‘availability of coverage’ for all until 2014,” when the majority of law’s provisions come into effect. But a a harshly-worded letter from Secretary Kathleen Sebelius seems to have pushed the industry to publicly accept the change.

This morning, Press Secretary Robert Gibbs announced the industry’s stance in a tweet:

@PressSec: Kids 1, insurance 0 as companies agree to comply with new regs so kids with pre-existing conditions can get health ins

Now clearly Gibbs didn’t want it to come off this way, but a glib, sarcastic tweet directed at the insurance companies isn’t the best course of action right now. Insurers never opposed the new regulations as long as lawmakers understood that covering children with pre-existing conditions would increase premiums and at least two large insurers — Aetna and Cigna — have already acknowledged that they will raise rates in anticipation of the new reform. The law’s rate review provisions may prevent the most egregious increases, but they won’t make premiums any more affordable.


The reality is, the administration will have to rely on insurers (and state insurance commissioners) to implement reform’s many provisions, including the all-important consumer protections. And while I’m not suggesting that a more conciliatory tone would override the insurers’ profit incentives, purposely antagonizing the industry certainly does not increase the chances that it will work effectively to increase access to coverage and adopt cost containment policies.

As I argued here, the administration was right to criticize insurers in an effort build political momentum for passing health care reform. But now that reform is reality, lawmakers will have to turn to work with the industry to enact the measure. The bill Obama signed isn’t strong enough to allow the administration or anyone else to just blow off the industry; it relies on insurers to make the whole thing work.