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PriceWaterhouseCoopers Backs Away From AHIP

PriceWaterhouseCoopers spends most of its time as a fairly respected consultancy operation. It's entrusted with the audits for ExxonMobile, Ford, IBM, Walt Disney, CBS and many others. It also has a division where outside groups can pay a handsome sum to commission reports on a topic of their choice. It's a neat arrangement: The outside groups know the results they want and the variables and constraints that will ensure that answer. But they don't have the legitimacy to release that report on their own. So they pay a consultancy -- like PWC -- to launder the analysis through their credibility. The consultancy gets a paycheck, the outside group gets a press release, and everyone goes home happy. In Washington, it's a tried-and-true tactic.

But PWC was clearly unprepared for the firestorm that erupted over yesterday's report. And they have their own credibility to protect. Last night, spokesman David Neston sent out an unexpected press release backing away from the analysis, and blaming AHIP for its deficiencies. It reads:

America’s Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal: -- Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.

-- An excise tax on employer-sponsored high value health plans.

-- Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers.

-- New taxes on health sector entities.

The analysis concluded that collectively the four provisions would raise premiums for private health insurance coverage. As the report itself acknowledges, other provisions that are part of health reform proposals were not included in the PwC analysis. The report stated on page 1:

“The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.”

In other words, PWC is saying that AHIP paid it to focus on four parts that AHIP didn't like and ignore everything else in the bill. On Page 1, PWC embedded a disclaimer essentially admitting that their report was woefully inadequate. Sort of "break glass in case of loud, public criticism." And now they're breaking the glass.

The disclaimer doesn't get PWC entirely off the hook; the methodological inadequacies of the report made the results nothing short of deceptive, and the final product still had PWC's name on it. But it makes it even harder for anyone to take the analysis seriously, and it leaves AHIP standing alone.

By Ezra Klein  |  October 13, 2009; 10:38 AM ET
Categories:  Health Reform  
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Next: The Senate Finance Committee Vote: 13-10 or 14-9?


Maybe we should all send thank you notes to AHIP for commissioning such a huge and conspicuous lie that has proven so counterproductive to its own goals.

Take that Karen Ignagni!

Posted by: bcbulger | October 13, 2009 11:04 AM | Report abuse

This reminds me of the Chamber of Commerce/climate change situation.

The tinfoil hat madness that permeates the contemporary right wing worldview is finally beginning to impact folks who spend lots of time in board rooms and country clubs, and they don't like it one bit.

Posted by: Jasper99 | October 13, 2009 11:07 AM | Report abuse

wow! talk about laying an egg.

and i think jasper99 is onto something important: the right-wing crazies are starting to get in the way of business! maybe that's what it will take to weaken their grip on the gop.

Posted by: howard16 | October 13, 2009 11:13 AM | Report abuse

Until this happened, I had forgotten PWC was playing the same games in service of the tobacco companies way back when.

The net result of this affair is to ruin PWC's reputation for a long time to come, with an awful lot of informed and engaged citizens.

For once, justice.

Posted by: bcamarda2 | October 13, 2009 11:13 AM | Report abuse

It was nice to see the rebuttals to the PWC report come so fast and furious.

Also interesting to see PWC throw their client under the bus.

Quote of the day (from Brian Buetler at TPM) on the one-sidedness of the study: "the PWC study was like noting the Red Sox scored 6 last night, without noting the Angels scored 7".

All this is going to do is strength the chances of public option of Medicare+x% with states getting to opt out

Posted by: scott1959 | October 13, 2009 11:29 AM | Report abuse

ezra won't stop beating a dead horse to continue to beat the drum for liberals. Every group out there puts partisan studies out. Liberals do it too. THe only issue should be is if this bill will not have strong enough penalties to strongly damage the healthcare for the majority of Americans.

Douglas Elmendorf has already said that they do not know at this point. LIBERALS ADMIT TO THIS. We're taking a huge gamble with everyone's healthcare for the healthcare for 5% of the country.

I hope for Democrats sake they're right otherwise they'll have 75-85% of voters really ticked off at them that WERE happy with their healthcare (not necessarily their costs but with their care). From the point reform is signed off on by the President this will be the Democrats "baby" and when and if it falls off the track they'll have a lot of explaining to do.

Insurers will simply say, "We tried to tell you" but liberals like Ezra shouted them down as partisan.

Posted by: visionbrkr | October 13, 2009 11:32 AM | Report abuse

The comment from visionbrkr is a typical conservative comment. Underlying his assertion that "we're taking a huge gamble with everyone's healthcare for the healthcare for 5% of the country" is the idea that those 'insured people' are safe and covered.

Wake up pal! Most people are so-called happy with their coverage because they (1)haven't used it and (2)have no real idea what it costs them.

Maybe you haven't realized it, but busting up the status quo is progress.

Posted by: bcbulger | October 13, 2009 11:46 AM | Report abuse

Seems like indeed things are changing in the way America handles PR and Media. I suspect, new media like blog sphere, may have helped to move this needle little bit.

The question is, will American industry become more careful in employing such deceitful techniques? May be I am too naive.

Or may be since 'policy' fights are between older industries fighting for their turf whereas new industries are yet to born (anyone for servicing health insurance exchanges? or web bot to find me the best insurance plan like airline tickets?); we always see 'outdated' media plays by the established, older industries?

Posted by: umesh409 | October 13, 2009 12:01 PM | Report abuse

bcbulber's comment doesn't make sense and its the typical liberal argument.

If most people haven't used it then why are we spending 2.3 TRILLION on healthcare annually? Is there really 2.2 Trillion in profit or more? My GOD no wonder Senator Rockefeller has railed against insurers so badly. I agree with him if their profit was that much.

The answer is people ARE using their healthcare. I agree that they don't know what it costs and should but don't be dumb enough to listen to the talking points to say people aren't using healthcare.

Posted by: visionbrkr | October 13, 2009 12:01 PM | Report abuse


I also realize that busting up the status quo is progress and change IS absolutely needed but I simply question HOW its changed and WHO it affects with all its intended and unintended consequences. I was fine with the bill in the SFC before they watered down the individual mandate and I hate the Free Rider as does Ezra and it should be replaced with an employer mandate.

Posted by: visionbrkr | October 13, 2009 12:07 PM | Report abuse

visionbrkr you're off-topic and it started with your ad hominem dead-horse flame.

bcbulger don't let this flame war pull you and the topic away from what it's discussing: PWC and its credibility, the media and its credibility, and the insurance lobby and its credibility.

Posted by: rosshunter | October 13, 2009 12:11 PM | Report abuse

karen ignani is among the most shameless of shamelss lobbyists, and one of the most damaging to the public in general.

Posted by: drindl | October 13, 2009 2:28 PM | Report abuse

Clearly big-D dems are closing ranks to discredit the PwC report. But let's be honest here. The press release doesn't say anything that the report itself doesn't say. Yet the White House put out a statement saying "PwC admitted it produced a skewed report." That's bullying.

The report has a tremendous amount of useful, previously unavailable data--so long as you read carefully and recognize that unfavorable data has been redacted.

By contrast, the Finance Committee has produced no comparable data (and seems to have no interest in doing so.) They did however rush out Jon Gruber's non-rebuttal, which contains no new information, plus suffers all the failings of the PwC report and many more.

Posted by: bmull | October 13, 2009 4:54 PM | Report abuse

karen ignani also appeared on Wolf Blitzer's "The Situation Room" yesterday and did not retract anything. She focused on something that is crucial to the insurance industry and what they know to be the survival of the current system, the individual mandate.

Personally i would have rather had the PWC report focus solely there. That would have carried more weight than them whining about taxes and how much they'll pass through to policyholders.

And how do insurers know that the the individual mandate is the key? Because they've lived it in the state level.

As i've said before the administration (even though they despise them) would be smart to ask insurers these questions because no one knows more than them how to answer them.

Posted by: visionbrkr | October 14, 2009 12:17 PM | Report abuse

The author, Ezra Klein, clearly shows his hand by his headline. PwC is did not back away from the report IMO. They clarified an aspect of the report. I think they could have given more coverage on the limitations of the report, significant proposed legislation that would impact the analysis, etc.
Klein is not the careful author when it comes to details or he is a poor typist -- it is not Exxon Mobile and it is not PriceWaterhouseCoopers -- check their names out my friend.

Posted by: ddlyml | October 18, 2009 12:55 PM | Report abuse

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