Insurance Lobby: We Do Want Health Reform. Promise
Karen Ignagni, head of America’s Health Insurance Plans, the industry lobby, fired back today against the charges that the industry is dead set against health care reform this year. The group has taken plenty of heat for sponsoring a report earlier this month indicating that the health reform bill recently passed by the Senate Finance Committee would hike Americans’ insurance premiums by thousands of dollars each year. In a Washington Post op-ed column published Tuesday, Ignagni defended both the timing and the findings of that report, arguing that health insurers are on board with reforms — if they contain a stronger individual mandate.
The report’s central finding has long been noncontroversial in health policy and economic circles: namely, that implementing reforms of the insurance market without a strong requirement that everyone participate will cause adverse selection and significantly increase costs for individuals and small businesses.
Ignagni is right about one thing here. The Senate Finance panel, on the last day of their marathon markup of the $829 billion reform bill, passed an amendment that both eased the penalties on those failing to buy insurance, and lowered the income threshold at which the coverage mandate would kick in. The Congressional Budget Office estimates that the provisions will result in millions of uninsured Americans remaining uninsured. That is, they won’t become new customers to the nation’s health insurance companies. Ignagni said that AHIP commissioned the controversial report only after it became clear that the Finance Committee “would gut” the individual mandate.
But that’s not all she said. Ignagni goes on to claim that the premium hikes would be an inevitable consequence of the Senate’s reforms — something somehow outside of the control of the insurance companies imposing them.
The report concluded that the proposed new taxes on health plans, pharmaceutical manufacturers and medical-device makers will increase the cost of coverage. These findings are entirely consistent with the judgment expressed by the director of the nonpartisan Congressional Budget Office, who recently told the Senate “that piece of the legislation would raise insurance premiums by roughly the amount of the revenue collected.”
Missing here, of course, is the inconvenient qualifier that the decision to hike those premiums is one that will be made by individual, for-profit insurance companies not willing to give up profits for the sake of salvaging the nation’s dysfunctional health care system — the real reason that expanded coverage and affordability aren’t exactly walking hand in hand.
That dynamic wasn’t lost on Sen. Jay Rockefeller (D-W.Va.). The chairman of the Finance Committee’s health subpanel blasted the AHIP report last week, arguing that the decision to raise premiums falls squarely on the shoulders of the insurance industry. “Health insurance companies have been laughing all the way to the bank for years while people suffered,” Rockefeller said.
The West Virginia Democrat could not, however, prod CBO Director Douglas Elmendorf into backing the idea that premium hikes are made at the discretion of insurance companies. While it’s “generally true” that additional costs are passed from businesses to consumers, whether they have “a choice” in doing so, Elmendorf said, is not his job to determine.