The health insurance lobbying arm AHIP takes a pretty reasonable position with respect to reforming how we pay for health care. However, the concessions that the industry has already made may harm its ability to oppose the reform bills being considered by Congress.
AHIP is an acronym for America's Health Insurance Plans, which is the trade association for private health insurance companies. On October 11 Karen Ignagni, President and CEO head of AHIP, released this memo critical of the Baucus bill which was recently approved by the Senate Finance Committee. In addition to making a number of arguments against the bill, the memo sets forth an ambitious and forward-thinking set of reforms, including the following:
* Putting the nation on a path to universal coverage, and ensuring that the linkage to universal coverage and market reform is restored;
* Taking a system-wide approach to bending the cost curve, instead of focusing on a subset of Medicare providers;
* Instituting evidence-based medical care and best practices nationwide;
* Reorienting the entire health care system to focus on prevention, wellness, and management of chronic conditions;
* Transforming health care administration;
* Enacting a 5:1 rating band to avoid rate shock for younger workers, and providing targeted financial assistance to older workers; and
* Enacting medial liability reform.
However, the very fact that AHIP supports reform to the extent that it does makes it difficult for the organization to oppose the bills that are now in Congress. Several of the reforms that AHIP supports – universal coverage, cost reduction, instituting best medical practices, and making insurance administration more efficient are in each of the congressional bills.
In addition, the argument that AHIP relies upon the most in opposing the Baucus bill is that the bill will raise the cost of private health insurance. Here is what Ignagni says about costs in the October 11 memo:
For example, the analysis shows that the cost of the average family policy is approximately $12,300 today and will rise to:
* $15,500 in 2013 under current law and to $17,200 if these provisions are implemented.
* $18,400 in 2016 under current law and to $21,300 if these provisions are implemented.
* $21,900 in 2019 under current law and to $25,900 if these provisions are implemented.
In other words, if nothing is done, health insurance premiums for a family of four will increase from $12,300 to $21,900 over the next ten years – but if we adopt the Baucus bill, in 2019 the cost of private health insurance will be $4,000 higher, $25,900! That is not a very persuasive argument because either result is unacceptable. In either case the average family of four will be unable to afford private health insurance, and we may as well give up on the system of private health insurance altogether! This is, in essence, not an argument against the Baucus bill but an argument in favor of a public option.
The solution that AHIP is proposing to the problem of rising health insurance costs isn't any more likely to appeal to the public. The main reason that AHIP believes the Baucus bill will make private health insurance even more expensive than it would have been without the bill is because the Baucus bill does not do enough to force individuals to purchase health insurance. In the absence of adequate penalties, people who are healthy will not buy health insurance but people who are sick will purchase insurance, and as a result the cost of private health insurance for everyone else will go up. During the mark-up sessions of the Senate Finance Committee the Committee reduced the penalties on individuals and employers who fail to purchase health insurance, and limited the classes of persons and employers who would be subject to the requirement to purchase insurance. AHIP opposed the changes that the Finance Committee made to the bill, and wants to increase the penalties that people would have to pay if they don't buy health insurance.
Here is a copy of a secret AHIP "talking points memo" obtained by Evan McMorris of Talking Points Memo that reinforces these points. As in the memo of October 11, AHIP admits that it supports "guaranteed coverage, elimination of pre-existing condition exclusions … and a personal coverage requirement." It is this last element – "a personal coverage requirement" – that is likely to be the single most unpopular feature of health care financing reform, and AHIP concedes that this has to be a part of the package, mainly because it goes hand-in-glove with the elimination of exclusions for preexisting conditions. This point is repeated several times and discussed at length in the secret memo. The memo insists that there must be "an enforceable personal responsibility requirement" and that "every American has a personal responsibility to get health insurance." Given how prominent this argument figures in the AHIP memo, it will be difficult for other opponents of reform to object to the individual mandate.
Accordingly, AHIP is in the position of arguing that individual mandate is wonderful but that the Baucus bill does not impose high enough penalties on people who fail to purchase insurance. Try running those two points past a focus group! AHIP's arguments may well backfire and could put Republicans who oppose the bill in an untenable position.
