Insurers Show Their True Colors
By Anthony Wright
Executive Director of Health Access California
October 14, 2009
The insurance industry isn't as supportive of health reform as they have claimed!
Not many people were "shocked, shocked" by the new, slanted insurance industry report and offensive by their lobbying association, America's Health Insurance Plans. Kate Steadman at Kaiser Health News has some of the varied reaction. It includes some impressive take-downs, by Jon Cohn at TNR and others, that show the comical assumptions and flawed results. Others, like Politico, have tried to analyze the political impact, positive or negative.
My response was similar to that of Wonkette: What took them so long?
Much has been made of the insurance industry's ostensible support for the concept of health reform, but these tensions have been present. They have always been actively opposed to the public health insurance option. They were reluctant to embrace some regulations, like modified community rating, and still opposed others, like minimum medical loss ratios.
In California in 2007, their ambivalence was clearer, since it showed in the different plan's positioning: we had our biggest health insurer, Anthem Blue Cross of California (owned by Wellpoint), actively opposing health reform--as the company has been doing this year as well. But there seemed to be possibility that the industry was split, and some insurers--like HealthNet, or California-based nonprofit plans like Kaiser and BlueShield--were willing to live under another set of rules, and to be supportive of health reform.
But it was always a stretch to call them the "good guys," because even with these plans, what they wanted for their support was so much, it was less than helpful. In return for getting rid of underwriting and screening people for "pre-existing conditions," they wanted an individual mandate, so people wouldn't wait until needing care to buy coverage. It's a revolutionary change to their business model, and fair in concept.
But their demands were a problem: they wanted a strict mandate. This means they wanted no or little exemptions, and a strict enforcement mechanism. They opposed not just the public plan option, but additional regulation.
In order to do away with denying people for "pre-existing conditions," the insurers want virtually everyone to get covered to best share the risk and costs of health care. In order to do that, Governor Schwarzenegger proposed a mandate but with not anemic help for people to afford their coverage. While fine for those insurers willing to be supportive, that obviously was a problem for consumer, labor, and community groups, which were successful in increasing the financial assistance that low- and moderate-income families would get--although some differed on whether it was enough.
The insurers tried to be helpful in arguing for more resources--but not at all in recognizing other trade-offs. When the level of subsidies is capped, either explicitly (President Obama has a target costs for health reform around $900 billion over 10 years) or implicitly by the amount of money that it is politically feasible to raise, then they need to recognize that there needs to be some additional security that consumers aren't forced to buy a product that is too expensive: exemptions, more stringent oversight and regulation, and/or competition from a public health insurance option. They oppose those elements, however. As Ezra Klein notes, they aren't even willing to support taxes to help fund the subsidies to buy their product.
The notion that they are willing to abandon their business model is significant--it's one of the truly revolutionary aspects of health reform, that we will move to a system where not only can you not be denied for a pre-existing conditions, but people start to pay based on what they can afford, rather than how sick they are. And insurers would then compete on cost and quality, rather than how effectively they acan avoid sick people. That said, even those insurers willing to play ball have really offered the bare minimum of what the new rules they are willing to play by are.
I hope the AHIP effort does encourage policymakers to increase subsidies so more people can get the coverage they need and want--but that it also strengthens the spine of policymakers' anti-AHIP efforts at greater insurer oversight, cost containment, the public health insurance option, and other important elements that should be included in health reform.
Health Access California promotes quality, affordable health care for all Californians. Health Access California is a statewide health care consumer advocacy coalition of over 200 groups.
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