Corporate Research Group’s Weblog

This is the battle we knew the health insurance industry would fight, so it’s no surprise to see it in black and white. 

“Creating a new government-run plan would thwart the ability of the health care sector to implement meaningful delivery system reforms, exacerbate the cost-shift from public programs to consumers and employers in the private market, and destabilize the employer-based system. In fact, studies show that more than 100 million people who currently have private coverage would move to the new government-run plan.”

So writes Karen Ignagni, chief executive of America’s Health Insurance Plans, and Scott Serota, chief executive of the Blue Cross Blue Shield Assn., in a joint letter March 24, 2009, to ranking members of the Senate Finance and the Health, Education, Labor and Pension committees.

The government-run plan in question is part of Obama’s healthcare reform package to reduce the number of uninsured in America.  Health insurers oppose it because, well, 100 million people might pick it over a private health plan.  Instead, the industry favors tax credits to help people buy insurance along with Medicaid and the expansion of SCHIP.

In exchange for no government plan, the industry is willing to guarantee it will provide insurance to anyone regardless of health status.  It will also “phase out the practice of varying premiums based on health status in the individual market.” 

The industry only asks for a mandate requiring every individual to purchase health insurance.  It also wants to reserve the right to vary premiums based on age, geography, family size and benefit design, and to provide discounts for people who don’t smoke and participate in wellness and disease management programs.

Of course, I’m willing to bet the insurance industry would cave in on nearly all these conditions if it could vanquish the government-run option for the uninsured.  The problem is, I also think the government-run option is as close to non-negotiable as you can get for the Obama Administration.

So it’s going to be interesting to see who wins this showdown.  Right now, it’s advantage Obama.  The very fact that the industry keeps suggesting compromises suggests it’s nervous.  But I wouldn’t count out the insurance lobby; it’s pretty savvy.

My take on the government-run option is “why not?”  As I wrote in an opinion piece in 2007: “Managed care plans have always maintained that their products are better than government-run programs (e.g., the industry has long argued that Medicare HMOs are superior to traditional Medicare).  So the industry should welcome an opportunity to go head-to-head with any public plan.  Health plans that can’t compete on a level playing field deserve to be shown the door.”

This entry was posted on Wednesday, March 25th, 2009 at 12:11 pm and is filed under Managed Care. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.