----- Original Message -----
From: Frank M Kline
Sent: Monday, October 12, 2009 12:21 PM
Subject: Fw: AHIP - plan would increase costs for individuals and families
----- Original Message -----
From: Don McCanne
To: Quote-of-the-Day
Sent: Monday, October 12, 2009 10:33 AM
Subject: qotd: AHIP - plan would increase costs for individuals and families
The Washington Post
October 12, 2009
New Bill Would Raise Rates, Says Insurance Group
By Ceci Connolly
After months of collaboration on President Obama's attempt to overhaul the nation's health-care system, the insurance industry plans to strike out against the effort on Monday with a report warning that the typical family premium in 2019 could cost $4,000 more than projected.
Administration officials, who spent much of the spring and summer wooing the insurers, questioned the timing and authorship of the report, which was paid for by America's Health Insurance Plans (AHIP), an industry trade group.
"The report makes clear that several major provisions in the current legislative proposal will cause health care costs to increase far faster and higher than they would under the current system," Karen Ignagni, AHIP's president and chief executive, wrote to board members Sunday. "Between 2010 and 2019 the cumulative increases in the cost of a typical family policy under this reform proposal will be approximately $20,700 more than it would be under the current system."
"Now that health-care reform grows ever closer, these health insurers are breaking out the same, tired playbook of deception to prevent millions of Americans from getting the affordable, accessible care they need," said Finance Committee spokesman Scott Mulhauser. "It's a health insurance company hatchet job, plain and simple."
"Those guys specialize in tax shelters," said Nancy-Ann DeParle, director of the White House Office of Health Reform. "Clearly this is not their area of expertise."
And...
PriceWaterhouseCoopers
October 2009
Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage
There are four provisions included in the Senate Finance Committee proposal that could increase private health insurance premiums above the levels projected under current law:
* Insurance market reforms coupled with a weak coverage requirement,
* A new tax on high-cost health care plans,
* Cost-shifting as a result of cuts to Medicare, and
* New taxes on several health care sectors.
This analysis shows that the cost of the average family coverage is approximately $12,300 today and could be expected to increase to approximately: $21,900 in 2019 under current law and to $25,900 if these provisions are implemented.
This analysis shows that the cost of the average single coverage is $4,600 today and could be expected to increase to: $8,200 in 2019 under current law and to $9,700 if these provisions are implemented.
By 2019 the cost of single coverage is expected to increase by $1,500 more than it would under the current system and the cost of family coverage is expected to increase by $4,000 more than it would under the current system. This amounts to an additional 18 percent increase in premiums by 2019. The overall 18 percent increase is a composite of increases by market segment as follows:
* 49% increase for the non-group (individual) market;
* 28% increase for small employers (those firms with fewer than 50 employees);
* 11% increase for large employers with insured coverage; and,
* 9% increase for self-insured employers.
Comment: Although Congress and the administration frown on this new report released by America's Health Insurance Plans (AHIP), in it the insurance industry has confirmed what we have been saying all along - insurance costs will "increase far faster and higher than they would under the current system."
The insurance industry got virtually everything they wanted (since they basically wrote the bill). The problem was that the the numbers would not compute. To prevent any deficits and to avoid obvious explicit tax increases, Congress had to manipulate the numbers. Since the tax credits would not be adequate, Congress had to exempt those middle-income individuals and families who could not afford the premiums. With guaranteed issue, adverse selection is then inevitable, driving up premiums for those covered by the plans.
Since much of the reform effort centers around the severe deficiencies of the individual market, it is important to note the impact on these plans. The individual market already provides the worst value in health insurance, and the Senate Finance proposal would drive those premiums up by an extra 49 percent over the next decade, according to the PriceWaterhouseCoopers (PWC) analysis. Contrast that to the large employers who self-insure through their own risk pools. The excess increase would be only 9 percent.
One important lesson in this report is that separating the health care funds from the insurance industry partially insulates them from the nefarious behavior of the insurers. The greatest problem that self-insured employers still face is that they have almost no control over systemic health care cost increases.
Imagine if we insulated all risk pools from the insurers, and spread the risk as widely as possible through a single, universal risk pool. That would create our own monopsony wherein we could demand greater value for our health care purchases. If we did that then we wouldn't even need the egregiously wasteful administrative excesses of the private insurance industry.
Instead of acknowledging the problem, Congress and the administration are attacking the messengers - PWC and AHIP. But it was Congress and the administration that decided that they wanted to get into bed with AHIP in the first place. Surely no one accuses Karen Ignagni of singing the siren songs of Lorelei, but she might as well have since our elected leaders are steering the ship of reform onto the rocks.
Time for a song. Let us sing to the health reform ship manned by AHIP, Congress and the Obama administration. Lorelei can lead our chorus. Then, with a fresh start, we will have a solid rock to serve as our foundation for reform.
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