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Industry honcho: Insurers "strongly support reform!"

M1X00213_9.JPGKaren Ignagni, president and CEO of America's Health Insurance Plans, took to The Post's op-ed page this morning with a defensive op-ed affirming her organization's support for health-care reform and attempting to rehabilitate the roundly mocked report they released last week.

Ignagni doesn't actually address many of the criticisms of the report's underlying methodology or internal contradictions. Indeed, this is damage control more than it is defense. "Let me be clear and direct," she writes. "Health plans continue to strongly support reform." To put that slightly differently, insurers continue to strongly not want to be seen as opponents to health-care reform. It's a real vote of confidence in the effort's momentum, and something of an admission that insurers could lose quite a bit if their behavior frees Democrats to legislate against them.

The major policy argument of Ignagni's op-ed is that "costs are the critical issue because their projected growth threatens the sustainability of the entire health-care system." The problem is that this is contradicted by one of the major policy recommendations of Ignagni's op-ed: That the excise tax on high-cost health-care insurance, which economists believe to be one of the strongest cost-control measures in the bill, should be removed. The argument, in other words, is that costs are the critical issue, but cost controls should be removed from the legislation.

AHIP is interested, as you'd expect, in what's good for insurers. But they couch their rhetoric in terms of what's good for the health-care system. Sometimes, there's actual overlap between those two things: They're right that a strong individual mandate paired with more generous subsidies would create a more universal system with lower average premiums. Sometimes, there isn't overlap between those things, as when they argue that cost control is the overriding issue but that the Senate is erring by including cost controls in the legislation. But the confusion comes because they're not admitting the difference between those two things. Some of what's good for insurers might, at times, be good for America. But that overlap is incidental, not intrinsic.

Photo credit: Dayna Smith.

By Ezra Klein  |  October 20, 2009; 12:17 PM ET
Categories:  Health Reform  
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Comments

"To put that slightly differently, insurers continue to strongly not want to be seen as opponents to health-care reform. It's a real vote of confidence in the effort's momentum, and something of an admission that insurers could lose quite a bit if their behavior frees Democrats to legislate against them."

Huh? Where has AHIP's position changed on any issue since before this effort began? This has nothing to do with momentum.

"The problem is that this is contradicted by one of the major policy recommendations of Ignagni's op-ed: That the excise tax on high-cost health-care insurance, which economists believe to be one of the strongest cost-control measures in the bill, should be removed. "

Not really. Yes its one of the strongest measures in the bill, but only because there aren't ANY strong cost-control measures in the bill. She's pushing for real cost-control reform, which you're already on record as also saying isn't really part of the bill.

"But the confusion comes because they're not admitting the difference between those two things. Some of what's good for insurers might, at times, be good for America. But that overlap is incidental, not intrinsic."

That's true of every party in this debate. Democrats could offer $50 billion in more subsidies for the uninsured in exchange for adding malpractice reform. The Democrats decided its more important to protect trial lawyers and will allow more people to die unnecessarily due to lack of health coverage. That's the Democrat's choice. They chose campaign donations over people's lives. EVERYONE is making these decisions based on what's best for them-- there are no good guys here. So stop with the demonization of AHIP. They have been overall supportive of health care reform, and that is a truer statement than the political scapegoating that Obama has done in the past few months to rally public support.

Let's just call it as it is, Ezra. You're paid by the Post, not the DNC.

Posted by: wisewon | October 20, 2009 12:31 PM | Report abuse

is it not blatently obvious that AHIP has been signaling for a strong individual mandate since PRIOR to when this round of reform began and WHEN the finance committee watered down the individual mandate then they came up with their PWC report? Ignani even admitted on CNN that when the SFC changed the individual mandate penalty they pushed PWC to complete their report so they could get it out to hopefully show what damange that adjustment in the SFC bill would do.

They know how important this is because they LIVE IT every single day in their member states.

I've said this before but look at NJ and MA as the examples. The two liberal states are very comparable in what they require insurers to cover but one has an individual mandate and one doesn't. MA has 97% people in the system. NJ is hemmoraging people from the system because of cost and a lack of accountability. If the SFC's current version takes place we'll have NJ instead of MA and that can't be allowed to happen.


And this bill doesn't control costs. That's all either been given back to hosptials/doctors or in the process of happening now. That's another major concern of theirs but God forbid they speak up they'll be demonized again.

Posted by: visionbrkr | October 20, 2009 12:40 PM | Report abuse

"The argument, in other words, is that costs are the critical issue, but cost controls should be removed from the legislation."

Huh? That's not the argument at all. They don't want cost controls removed from the legislation, they want weak sauce cost controls removed and replaced with real cost controls.

Posted by: ab13 | October 20, 2009 12:43 PM | Report abuse

Insurers are the one part of the system that is completely inessential. They add nothing of value and impose considerable costs. The most effective possible cost control would be to eliminate them entirely. I think they're aware of that and view excise taxes as the first step down a slippery slope.

Posted by: pj_camp | October 20, 2009 12:50 PM | Report abuse

Ezra wrote: "The argument, in other words, is that costs are the critical issue, but cost controls should be removed from the legislation."

Actually, no. You can say this with a straight face only if you do not understand the actual cost drivers of health care. The primary actual cost driver of health care is (ta da!) what doctors, hospitals, and other healthcare providers charge.

Therefore, imposing an excise tax on the cost of insurance will do absolutely nothing, zero, zip, nada, to decrease the cost of health care. The tax imposes pressure on insurers and employers, but has no effect on physicians, hospitals and other healthcare providers.

The excise tax may (will likely) drive employers to change the coverages they offer (including dental, vision, etc.) to fall just under the threshold and so avoid the tax. Some employers will not be able to do that, sometimes because of union contracts where the benefit levels are legally locked in, sometimes because the cost of healthcare in their geographic area is high.

While the "Cadillac" plan excise tax might be a "cost control" of the entire reform bill (if you equate "cost control" with "funding"), it is in no way a "cost control" of the healthcare costs providers charge. It's disingenuous to suggest otherwise.

Posted by: Policywonky | October 20, 2009 12:54 PM | Report abuse

Correction to my previous comment: I should have noted that the excise tax applies to self-funded plans as well as insured plans.

Posted by: Policywonky | October 20, 2009 12:57 PM | Report abuse

"and something of an admission that insurers could lose quite a bit if their behavior frees Democrats to legislate against them."


I love this, their behavior! Behavior that when outsiders who say the same thing aren't demonized. I want to know when CBPP is going to be called on the carpet for this:

http://voices.washingtonpost.com/ezra-klein/2009/10/how_to_improve_the_finance_bil.html


How dare they spew the talking points of the evil insurers.

Posted by: visionbrkr | October 20, 2009 12:58 PM | Report abuse

Ezra knows and has acknowledged before that the excise is a weak sauce compromise that is not effective as cost control, but now if he can call it cost control in order to demonize AHIP for opposing it he will jump at the chance.

I remember when he actually gave straight, unbiased analysis (to the left of me, but objective nonetheless), not partisan nonsense like this.

Posted by: ab13 | October 20, 2009 1:02 PM | Report abuse

If the excise tax is a "weak sauce," cost control, then what would be an example of hot-tomali cost control? Wisewon mentions medical malpractice reform, but considering the huge amounts of money involved in health care I don't think that really amounts to anything all that spicy.

Posted by: nklein1553 | October 20, 2009 1:19 PM | Report abuse

pjcamp,

obviously you know nothing about utilization review, cost-containment features, fraud eradication, disease management etc, etc, etc. oh and they process claims too.


but hey get your single payer and then once they doctors, hospitals and pharma have eaten you alive because there are no checks and balances on them there won't be any money left forour obviously necessary labotamy surgery so you'll be on the hook for that one, OK?

Posted by: visionbrkr | October 20, 2009 1:55 PM | Report abuse

##*(&$# typos.

I meant "for your" obviously necessary labotamy surgery. Nice freudian slip though.


nklein,

some examples of cost containment features are HSA's, mandatory generic drug plans. Insurers could also stop allowing MRI's for procedures that don't require MRI's. They also could tell cancer patients that they don't need an MRI every 3 months that every 6 months will do or every year.

Posted by: visionbrkr | October 20, 2009 1:58 PM | Report abuse

nklein,

Reasonable question. Medical malpractice isn't "real" cost control, either. When our system in spending $700 billion more than it should annually, that's the driver of the "weak sauce" comments.

Examples of tougher cost controls? Some would be:

-- greater cost-sharing based on level of cost-effectiveness (cost-effective things are cheap, but cost-ineffective ones have heavy co-pays)
-- compensation HEAVILY based on outcomes
-- capitation
-- global health budgets
-- NICE-type of government control

There are others as well. Just remember that when we're "saving" $100 or 200 billion due to a given policy over 10 years, when we'll be spending $30 to 40 trillion over that time period, that isn't real cost control.

Posted by: wisewon | October 20, 2009 2:03 PM | Report abuse

So then my questions are how much will those recommendations save and does this report contain those recommendations in it? It seems to me Ezra's main criticism of the AHIP report is that it makes some pretty indefensible assumptions. For example, that the cost of the excise tax will be 100% cost shifted to consumers and that consumers will not change their behavior at all so as to avoid paying the tax. These strike me as a valid criticisms. However, if Ezra is saying that insurance companies oppose all cost control measures then I agree with visionbrkr--that is hyperbolic at best, disingenuous at worst. But, I don't think that's the case. What Ezra is trying to say (I think) is that Ignagni and the rest of the insurance industry oppose any cost control measures that would hurt them. Maybe I'm wrong, but none of visionbrkr's recommendations would cost the insurance industry a dime. That seems unfair. We all need to sacrifice to increase coverage, including insurance companies.

Posted by: nklein1553 | October 20, 2009 2:19 PM | Report abuse

nklein,

they also could go back to cost containment models that worked in the past and still do and were once touted by the administration. Geisinger Health Plans is one example. (even though President Obama still butchers the prononciation of it) Geisinger kept costs in line by having the insurance company own the hospital network so they kept their costs in line that way. I'm sure others have that model too in instances throughout the US.

Also some insurers used to say when you needed to see a cardiologist that your primary care doctor could only send you to a small list of them (that in turn accepted a much lesser fee for that guaranteed business). Its that limiting of patient choice that people hated in the 90's but also the one that controlled costs unlike anything else.

Posted by: visionbrkr | October 20, 2009 2:20 PM | Report abuse

Thank you wisewon, I'll have to look into some of those suggestions more when I have more time.

Posted by: nklein1553 | October 20, 2009 2:20 PM | Report abuse

Ditto to visionbrkr

Posted by: nklein1553 | October 20, 2009 2:21 PM | Report abuse

nklein,

I agree wholeheartedly that we all need to sacrifice in order to obtain quality affordable coverage for all.

a potential national MLR ratio (which I'm in favor of BTW) does cost the insurance company money. It will further reduce their profit margins.

I also don't agree with AHIP's assumption that 100% of the costs will be passed on. Some will, some won't. Maybe 40%? 50%? who knows. ANd I do think that they do oppose reforms that hurt them but I also think they're smart enough to know that if NO REFORMS ARE DONE then it hurts them even more. That's why they're saying they're pro-reform, just the right type of reform.

Oh and also the givebacks of the subsidization of the Medicare Advantage is something that insurers lose in this. What was that $120 Billion? On the plus side they gain a potential for what, 25 million subsidized members?

Also the end of the medicare advantage subsidy does not affect every insurer the same. Some insurers aren't in that market so they'd welcome the end to the subsidy for their competitors.

Posted by: visionbrkr | October 20, 2009 2:28 PM | Report abuse

"Geisinger kept costs in line by having the insurance company own the hospital network so they kept their costs in line that way."

OH. MY. GOD!!! So the whole system, from doctor to agent, was focused on its own profits rather than your health...holy cow...

As for Karen: sorry honey, too late. The public option is on its way.

Posted by: evangeline135 | October 20, 2009 2:48 PM | Report abuse

After watching Wendell Potter on Bill Moyers Journal I have to say visionbrkr, I think I agree with evangeline135 on this. When it comes to a person's health I'm just not convinced that the invisible hand is the best mechanism to ensure an equitable health insurance system. That's not to say there is no place for insurance companies and competition. It's just that competition has to productive, i.e. it leads to better health outcomes, rather than just competition to see how to screw people out of their benefits. I'm sure you're a good person and all, it's just that I don't know if I'm ready to trust insurance companies to run the entire health care system. Especially after that Moyers piece.

Posted by: nklein1553 | October 20, 2009 3:04 PM | Report abuse

evangeline135,


and not only that, President Obama touted it as a model for efficency (BECAUSE IT IS). But hey we can go to medicare for all and those doctors committing fraud can have a field day with not only a part of the candy store, THEY CAN GET THE WHOLE THING!! We can have NO cost containment and then when we're taxed up to our eyeballs and we can't afford anything hey at least we'll have real good healthcare, right? YOu do realize that even countries like England and Canada are struggling with their models of efficency right?

Posted by: visionbrkr | October 20, 2009 3:07 PM | Report abuse

nklein1553,


I'm all for discussions as far as the best way to do this to ensure that coverage is affordable for all, people have access and insurance companies are accountable but I'd like EVERYONE to be accountable. And I'm not saying insurers need to be given the key to the candy store. Make them accountable more than any other as they control the purse-strings. Put in an effective national MLR at 85%. End pre-ex.

I'm not saying allow insurers free reign to do whatever they feel. Also i think the appeals process for denied procedures is severely inadequate. It needs to be easier, quicker and people need to be able to immediately reach out to get help outside of insurers to make sure something that should be covered is. But what happens what that something is the government? Who do Medicare receipients go to get "made right" when the government says you can't have this treatment or that treatment? That's the endgame.

Posted by: visionbrkr | October 20, 2009 3:26 PM | Report abuse

Visionbrkr, I agree with you, I don't think single payer is such a great idea. I'd rather have a regulated multi-payer market place. But in an earlier post you took a pretty strong stand that government can never do anything to contain costs. Now you seem to be saying that government does have a place in setting rules the insurance companies have to live by. So which is it?

Posted by: nklein1553 | October 20, 2009 3:51 PM | Report abuse

nklein,

I believe government should be the referee, not a direct payer. I don't believe politically government can ration care which I believe will eventually be necessary. Once Medicare was enacted that changed the game and them as a direct payer for the over 65 group could never be changed. I understand that once a person reaches a certain age they cannot fend for themselves so they need to be taken care of. I would prefer that that person saved throughout their lifetime but again realize that's unrealistic and not everyone would be able to so they need to be cared for.

My perfect version of reform is the SFC version with a stronger individual mandate that ensures we get to 97% or more of people covered and then use cost containment features to keep costs in line where they're affordable for all over the long term. Too much of what is being done now is a band-aid on a gushing wound. They're not addressing cost and reducing them but they're just spending more money to pay for access.

Posted by: visionbrkr | October 20, 2009 4:30 PM | Report abuse

"YOu do realize that even countries like England and Canada are struggling with their models of efficency right?"

We pay twice as much per person as Canada and 2.5 times as much as England. In practically all of the 16 bottom line public health statistics, they do better than we do. Nobody dies, suffers or goes bankrupt in Canada or England because they lack decent health care.

Can you imagine how great their systems would be if they increased their support by 20%? And they would still be paying much less than we pay.

Posted by: lensch | October 20, 2009 10:07 PM | Report abuse

nklein - Look there are about 23 other ccountries that get better health care at much lower cost than we do. They have drastically different health care systems. UK - Socialized Medicine, France - Government run insurance with fee for service. But all of them are government controlled and universal. None of them use the competitive free market.

You might like Switzerland. They have 94 more or less private health insurance companies. Definitely not single payer. BUT the government writes a basic policy that all must offer at the price the government sets. They cannot make any profit on the basic plan although they can on supplementary polices. Evryone must have the basic plan, but there are subsidies for those who cannot afford it.

Works pretty well. We pay 50% more per person and they have better results, however, they pay a third more than France and two thirds more than England. But I would take it in a NY minute over anything proposed in Congress or by visionbrkr.

Posted by: lensch | October 20, 2009 10:19 PM | Report abuse

nklein - There are about 23 countries that get better results than we do at much lower cost. They have drastically different systems. UK - socialized medicine. France - government insurance. Canada - health insurance run by each province.

But they all are government controlled universal plans. None of them use the competitive free market.

You might like the Swiss plan. They have 94 more or less private insurance companies. Definitely not single payer. BUT the government writes a basic policy which all companies must offer at the government set price. They cannot make any profit on this plan although they can on supplementary policies. Everyone must have at least the basic policy. There are subsidies for those who need them.

Works pretty well. They get better results than we do although we pay 50% more than they pay, however, they pay a third more than France or Cnanda and two thirds more than England. I would take their plan in a NY minute over anything proposed in Congress or by visionbrkr.

Posted by: lensch | October 20, 2009 10:28 PM | Report abuse

Sorry about the double posting.

Posted by: lensch | October 20, 2009 10:48 PM | Report abuse

President Obama is the coucher-in-chief when it comes to representing what's good for him as being being good for the country. Remember, failure is not an option.

Posted by: bmull | October 21, 2009 5:48 AM | Report abuse

lensch,

WOW, you blasted me twice! LOL!

actually I would be amenable to the Swiss model. If the government set the prices insurers could charge (and in turn what doctors were paid) and they (insurers, doctors, hospitals) couldn't make a profit I'd be fine with that.

Good luck telling doctors they're capped at what they can make though. You know that whole SRG mess we're in now that's being bought out by the Senate Democrats. That 21% would be in effect and then some.

Posted by: visionbrkr | October 21, 2009 9:15 AM | Report abuse

"YOu do realize that even countries like England and Canada are struggling with their models of efficency right?"

We pay twice as much per person as Canada and 2.5 times as much as England. In practically all of the 16 bottom line public health statistics, they do better than we do. Nobody dies, suffers or goes bankrupt in Canada or England because they lack decent health care.

Can you imagine how great their systems would be if they increased their support by 20%? And they would still be paying much less than we pay.

Posted by: lensch | October 20, 2009 10:07 PM | Report abuse

And again lensch you fail to point out that our system is beholden to the drug companies unlike any other which is not insurers fault. If drug companies were forced to reduce their rates by 20% in the US and offset that by raising their rates outside of the US by 5% it would (I expect) keep their profits healthy but reduce our cost substantially. Just like the military the US is subsidizing the rest of the world on this front. You're comparing apples and oranges.

We could get rid of insurers and save that profit margin but as ab13 states it would be a drop in the bucket. In a year's time we'd be back to being unaffordable. We need to reduce utilization to reduce costs. Government can't do that politically.

Posted by: visionbrkr | October 21, 2009 9:23 AM | Report abuse

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