Private insurance companies push for 'individual mandate'
As momentum gains for reforms, insurers hope to turn it to their advantage by supporting a proposal that everyone buy coverage. It would be a boost for the industry, which has seen enrollment decline.
By Lisa Girion
LA Times
Some may find it hard to believe that the U.S. health insurance industry supports making major changes to the nation's healthcare system.
The industry, after all, scuttled President Clinton's healthcare overhaul bid with ads featuring "Harry and Louise" fretting about change.
But this time, it turns out, the health insurance industry has good reason to support at least some change: It needs it.
Private health insurance faces a bleak future if the proposal they champion most vigorously -- a requirement that everyone buy medical coverage -- is not adopted.
The customer base for private insurance has slipped since 2000, when soaring premiums began driving people out. The recession has accelerated the problem. But even after the economy recovers, the downward spiral is expected to continue for years as baby boomers become eligible for Medicare -- and stop buying private insurance.
Insurers do not embrace all of the healthcare restructuring proposals. But they are fighting hard for a purchase requirement, sweetened with taxpayer-funded subsidies for customers who can't afford it, and enforced with fines.
Such a so-called individual mandate amounts to a huge booster shot for health insurers, which would serve up millions of new customers almost overnight.
"I think that's why we've seen the industry basically trying to play the administration's game," said Jane DuBose, an analyst with industry tracking firm HealthLeaders-InterStudy. "They really could be licking their chops over the potential here."
The industry says its interest in change flows not from narrow self-interest but from broader concerns.
"What's driving this is we have 47 million people who don't have access to the system, who get help through emergency rooms, and that results in higher costs and inefficient care," said Robert Zirkelbach, a spokesman for industry trade group America's Health Insurance Plans. "There's both a social and economic reason to get everybody in the healthcare system."
Jay Gellert, chief executive of Woodland Hills-based Health Net, said industry support for certain changes is driven by "a recognition that public frustration with many of the problems in the system [is] increasing pretty significantly. So I think there's as much of a commitment to this because we've seen other industries where they haven't dealt with issues early enough, like financial services and auto, and that's not a happy place."
Still, industry observers say, private insurers need the government's help to transform some of the nation's 45 million uninsured residents into paying customers.
Private insurers lost an estimated 9 million customers between 2000 and 2007. In many cases, people lost coverage because they or their employers could no longer afford it as premium increases outpaced wage growth and inflation.
Recession job losses are adding to the toll. Some economists estimate that every percentage-point increase in the jobless rate adds 1 million people to the ranks of the uninsured.
The industry's real trouble begins in 2011, when 79 million baby boomers begin turning 65. Health insurers stand to lose a huge slice of their commercially insured enrollment (estimated at 162 million to 172 million people) over the next two decades to Medicare, the government-funded health insurance program for seniors.
"The rate of aging far and away exceeds the birth rate," said Sheryl Skolnick, a CRT Capital Group healthcare investment analyst. "That's got to be very scary. . . . This is the biggest fight for survival managed care has ever faced, at least since they went bankrupt in the late '80s."
With Democrats in power and public sentiment in favor of change, the industry can't afford to flatly oppose it, said Julius Hobson, a Washington lobbyist for hospitals and insurers with the law firm Bryan Cave.
"This time, you get the sense something is going to happen," he said. "So to stand up and just say no is probably not wise, because politically you could get run over."
For insurers, getting "run over" would be the adoption of a so-called single-payer plan, in which the government pays all medical bills. Such a plan, though widely viewed as politically unfeasible this year, would wreak havoc on the private insurance market.
The best way for the industry to preserve the private insurance market -- and derail the campaign for a single-payer system -- may be to go along with more palatable proposals on the table now, said Jeffrey Miles, a healthcare analyst and president of the Miles Organization, a Los Angeles insurance brokerage firm.
"If healthcare goes down this year, you are going to end up with single-payer care much sooner than anyone expected," he said.
But there is a limit to how much change the industry will abide. It draws the line at proposals, supported by President Obama and others, to offer consumers a public insurance alternative to private coverage.
The idea is that consumers could buy into a government-run health plan, such as or similar to Medicare or the federal employees insurance program.
Proponents say that if consumers are required to buy coverage, it is only fair to give them a public option.
In a recent letter to Senate Finance Committee Chairman Max Baucus (D-Mont.), for example, Jerry Flanagan of the Santa Monica-based advocacy group Consumer Watchdog wrote that adopting an individual mandate without a public alternative would amount to "a bailout for HMOs -- whose greed, waste and indifference to our health have created the current mess."
The industry fears that the government would force lower fees on hospitals and physicians, enabling a public health insurance plan to offer consumers a better bargain.
That, they say, would make it hard for private companies to compete for customers. Insurers also fear that a public option could easily be converted later into a single-payer healthcare system.
Health insurers don't see a public plan "as the nose of the camel under the tent; they see it as the front half of the camel under the tent," said Robert Laszewski, a former insurance company executive and industry consultant.
"They are interested in 45 million new customers," he said, "but the first thing in everybody's mind is preserving their right to do business in a way that can be profitable and meet shareholder needs."
Source: LA Times
Comments
Health Care
Single-payer is not going to happen. Switch efforts to a parallel FHI (Federal Health Insurance), a sign-up tax of 6% of adjusted gross income. Coverage would be what U.S. Government employees’ HMO’s provide but for everybody who signs up. Private providers receive discounted rates as they do today from insurance companies. Prescription costs must be negotiated by U.S. Government.
Plan:
1. Private care providers would get the discounted rates that health-insurance companies now pay--regularly, a discount of 67%. That means they pay 1/3 the billed amount.
2. Funding comes from a sign-up 6% flat tax of adjusted gross income similar to Medicare and Social Security.
3. Costs of prescription drugs will be negotiated by the U.S. Government, which it failed to do with Medicare.
4. Restructuring: ER’s for emergencies; Urgent Care for urgent care; clinics for colds, flu, immunizations; free up physicians, more nurse practitioners, more physician’s assistants.
5. Modest copays to reduce nuisance visits.
Comments:
1. If health-insurance-company administration, profit, overhead, and billing are about 40% of health-care costs, eliminating health insurance companies from FHI makes it possible to do this for 6%.
2. Health-insurance companies could continue, as before, to cherry-pick customers. To assuage them, let them keep the big accounts. (Politics is the art of the possible.)
3. Most, if not all, health-insurance companies have teams of employees whose job is to cancel insurance on people who cost too much, ie., are really ill. They purposefully let people die. (They can’t get away with this for Federal Employees Health Benefits and other large-contract policies because of substantial appeals processes.)
4. Eliminating health-insurance companies from FHI causes them to lose some customers and puts some their employees out of work. Many of them are former health-care providers (nurses, physicians). In this plan, lots more health-care providers will be needed. They can go back to being useful.
5. The U.S. Government must negotiate prescription costs. This was stabbed in the back at the time of Medicare, Part D. Need I say more? The U.S. Government has given away the store on patents for drugs developed under Government research grants. Reverse that. Many of the major drug companies have been exposed by internal memoranda for suppressing evidence of life-threatening side effects of their drugs. Don’t feel sorry for them receiving lots less for drugs. They spend several times as much on advertising as on research. Pass a law banning drug-company advertising except in medical journals. That should make up the difference.
6. This essentially provides everybody with the same coverage that HMO’s provide through Federal Employees Health Benefits. It’s real coverage because health insurance companies won’t deny payment in Federal HMO’s because of appeals processes.
7. By externalizing health-care costs from business costs, it would make American companies more competitive.
8. You’ll notice there is no mention of 1.5% cost containment. That’s because that’s bullshit.
9. The alternative is to keep the enormously unfair, needlessly expensive system we have or change to some hodge-podge mess that ultimately demands that people who can’t afford health insurance buy health insurance that is too expensive, gets canceled, and doesn’t pay.
10. Everyone who is against universal health care has good-to-excellent health insurance for free or for modest premiums.