A Chat With the Head of the Health Insurance Industry

A small but important point that sometimes gets lost.

She isn't the Head of the Health Insurance Industry. She's a lobbyist. A mouthpiece with legislative connections. The actual knowledge, and vision for the industry, sits with the CEOs that she works for. There's a big difference.

"That's a very good question."

Well, Ezra, except for your very last remark, that was awful. As you said at the end, their business model which is based on low MLR's is terrible. Why didn't you point this out to her? Also why was there no (zero, nada, zilch) mention of any other country? Why do we have to reinvent the wheel?

Ezra,

Excellent first question to Ignani.

Its about solving a "governing the commons" problem. This is precisely what Republicans don't get-- these specific reforms ARE market friendly, the industry wants them, but no one can take the first step alone. This is precisely the role of what government would be for those that are pro-market. Unfortunately, too few Republicans understand what "pro-market" in health care means.

Ezra,

Where were the questions on recissions, dropping people when they get sick, and the incestuous relationship between insurance companies, hospitals, and other providers on pricing. I am disappointed that you allowed her to spout insurance company propaganda without challenging her on these basic issues. It would have been good to get her to respond to the basic flaw in the for profit insurance model, i.e. Companies make more money when they deny coverage than when they pay for coverage, so it is always in their interest to work the three Ds: distract, delay, deny on policy holders. Since it is clear that in today's economy, insurance is a necessity for all but the hyper rich, why shouldn't health insurance companies be federally regulated industries like water and power companies once were (some still are). Isn't this the way that places like Germany, the Netherlands, and France work the universal coverage with out a British style national health service?

srw3,

did you even WATCH the report or just saw AHIP and had visions of demons in your head?

What about insurers came up with the universal model for an end to pre-ex didn't you get?

what about the one cent per dollar in premium is in profits didn't you hear? What about 3.5% profit margin compared to 19% for pharma didn't you get?

distract, deny, delay. Did you even hear about the electonic auto ajudication process they're PAYING FOR THEMSELVES. That will pay docs in weeks instead of months.

People really need to get rid of these pre-conceived notions they have that insurers are the bogeyman. I know the President and Pelosi are pushing them but please think for yourselves.

Insurers pushed preventative care before government, insurers pushed disease management before government. Most all innovation comes from insurers not governemnt. But yet some of you want to push the government as the only model. That government of the $500 hammer??? Are we that far away from that that we forget how that worked??

The reality is Karen made some very good points. Mainly, that the industry has come to the table with a major change to their business model, that there is consensus on 80% of the bills (why, o why can't we talk more about this?), that CBO scoring is a flaw in the process here, and that private industry has come up with many cost containment mechanisms that should be exported to Medicare, since Medicare is simply a payor (Ezra, I thought you were going to go all 'MedPac to the executive branch' on us but you let it go...).

But keep in mind, the cost containment that private industry has pushed is the stuff that makes insurance companies hated. No one likes to hear the drug their doc prescribed is non-formulary, or they need to follow a disease mgmt program, or they need to have the high end radiology precertified. All of these are good measures, save money, but make me hate my insurance company.

Her comments against the public option were nonsensical: if insurance industry profits are so low, competing against a profitless entity should not scare them. If the government can't negotiate and they can, then that should not scare them. If providers can't accept Medicare rates, particularly if it is expanded in a public option, then what are they worried about? Rates would float upwards. She was arguing, in essence, that the public option should not be feared. Of course, no oligarchy wants a new entrant. That is the bottom line.

But if she said "good question" one more time.....why do people say that? Just answer the question.

In speaking of the town halls Ezra said that Americans watching must wonder "How can something really good come out of a process that appears to be dominated by the extremes."

Ezra, a majority of Republicans and Independents wonder the same thing about the legislative process for the reform bills. Virtually all of the negotiations surrounding the drafting of the bills have taken place among various factions of the Dems. Why would you expect Republicans and Independents to view the Dem.'s legislative process any different than you view the town halls? At best these bills represent a consensus of Dems, not a bi-partisan consensus.

Also, you mention that HMOs poll poorly but fail to mention that Congress is held in even lower regard.

scott,

it doesn't have to deal with a profitless entity but dealing with the one that sets the rules. If they allow medicare rates or medicare +5% like the drafts say then insurers can't compete unless they FORCE that as well and then we end up with more hospitals in bankruptcy.

to that end i'd love to see a piece from ezra (to me the hardest working journalist on the healthcare beat) on hospitals' struggling and how many went into bankruptcy. I'll bet its a high number.

Ms. Ignagni is very smooth, but that is why she has the job she has which is to represent the insurance companies [full stop]. I don't trust her a bit.

Adverse selection, moral hazard and the mathematics and economics of health care insurance are not new ideas. If this "industry" wanted to make any of the corrections or improvements (even as minor as streamlining paperwork) they could have done this decades ago.

These guys are all about gaming the system and obscuring their actions and methods. Her criticism the ability of Congress to get things done only makes sense in the current context of a fragmented system. AHIP, PHARMA and others in the health care industry take advantage of the lack of solidarity resulting breaking people into Medicare, Medicaid, group market, individual market, and uninsured. If everyone were in one single payer system, Congress would act much more cohesively to institute good policy.

Medicare is underpaying hospitals? How do you get a health care provider to participate if you're underpaying? AHIP is talking (some) sense now after spending decades spewing nonsense so they can avoid legislation that would foster any real competition between themselves or against a public option.

I used to work for a Blue Cross plan. These guys are very secretive, very nasty, very protective of themselves, and have lots of money (from premium with a lack of competition) and power to wield. They call government bureaucratic which is the pot calling the kettle black.

AHIP wants the US taxpayer to continue to subsidize the existence of insurance companies, lobbyists and redundancies that are wholly unnecessary while it continues to manipulate politics to neutralize threats, real or perceived, including any competition.

bcbulger,

talk to any hospital administrator and they'll tell you about Medicare's underpayment (don't even get me started on charity care, etc)

if you watched the interview you would see that they don't game the system, the system in many ways games them and they have to deal with it. Do you know how many people in group insurance situations know that you can go 61 days (under HIPAA) without healthcare and NOT be subject to pre-ex. People do this all the time. Adverse selection is real and costs the industry billions. They deal with it. They are also forced to raise our rates due to that.
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Medicare is underpaying hospitals? How do you get a health care provider to participate if you're underpaying? AHIP is talking (some) sense now after spending decades spewing nonsense so they can avoid legislation that would foster any real competition between themselves or against a public option.

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if you truly worked for BCBS you'd know why hospitals do this. Medicare brings the threat of 65 MILLION seniors that won't go there if they don't accept them. that's a lot of market share for a hospital to give up.

You did hear that their profit is one cent per dollar of health premium right? Sure let's not have them make ANY profit, i'm all for that and always have been. it wouldn't help at all.

It sure hurts to have your bogeyman debunked as NOT a bogeyman.

Let's try this again. I always seem to be getting this in too late.

visionbrkr, as someone in the industry, you should know that it is not run on profits. I am sure you know this but here is a primer.

The goal of a well run corporation is to make money for shareholders. In the case of health insurance companies this is in conflict with providing good efficient health care to the country.

The for profit insurers have learned that the way to get a high stock price is to have a low Medical Loss Ratio which is the percentage of inflow (premiums) paid out in medical benefit to patients. Notice that they consider medical benefits as "losses."

They do this in two ways. They make the numerator smaller by making it difficult for doctors and patients to collect, by cherry picking, and by recession. They make the denominator larger by obscene executive compensation, high profits, billions spent processing complicated forms they require of physicians and patients, and still more billions spent on fighting with doctors and patients over coverage and payments. This money lowers profit, but because it is money spent on things other than medical benefits, it lowers the MLR.

We waste about $200 each year because the major companies have managed to get their MLR down to 70% - 80% and another $200 Billion each year because of compliance costs for physicians and patients filling out forms and fighting to get paid. But all this goes to lower the MLR.

Sorry, that should have been

We waste about $200 BILLION each years because the major companies....

lensch,

you argument doesn't hold water because insurers don't provide care. they are nothing more than a payment funding mechanism because 99.5% of the population couldn't afford the triple bypass that will eventually come for all of us or some other expensive ailment that costs hundreds of thousands of dollars. Doctors, hospitals, pharma provides care. Insurers are just the evil mechanism.

And if that was the case as i've said before require MLR's nationwide to be 85%

You not listening. Sure they are a funding mechanism, but what I am saying is that they are a very inefficient funding mechanism. I don't see what triple by-passes have to with it, but if we had an efficient nationalized universal health care system like very other industrialized country, _everyone_ would get a triple by-passes if they needed it, not just those with decent insrance plans. And the system would cost us less.

As for your MLR requirement, other countries as well as the Federal part over Medicare have MLR's around 98%. Canda's is 98.7%. Even if we could get 85%, there still would be hindreds of Billions of waste.

Am I the only one having problems watching this? No matter how I come at it, it seems I always end up routed to cspan.org, without any video loading...