How reform may help health insurers

Joel Rose Sep 28, 2009

How reform may help health insurers

Joel Rose Sep 28, 2009


Kai Ryssdal: If you want to stay up to speed on the health-care debate, room 216 of the Hart Senate Office Building in Washington is the place you’ll want to be at 9:40 tomorrow morning. The Senate Finance Committee will be getting back to work on its overhaul bill.

One of the key features of that bill is something known as an individual mandate, a requirement that everyone has to have health insurance, even if they have to buy it themselves. As with everything in this debate, that idea has its supporters and its opponents. The insurance industry comes down firmly on the supporter side of that requirement. Joel Rose has more of our series “The Cure, Remaking Health Care.”

JOEL ROSE: The Senate Finance Committee’s health care bill would potentially mean 30 to 40 million new customers for private-insurance companies and billions of dollars in new revenues.

RICHARD Kirsch: This is a bill which I think is in almost every way the insurance companies’ dreams.

That’s Richard Kirsch from Health Care for America NOW, a liberal activist group. He says insurance companies are getting what they wanted the most, without giving up much in return. The bill does not include the “public option” of a government-run insurance plan that would compete with private insurers. And there are no caps on the growth of insurance premiums. California Lt. Governor and former insurance commissioner John Garamendi says that’s a recipe for disaster.

JOHN Garamendi: There’ll be at least 30 million Americans that’ll be thrown into the insurance marketplace. And I’m telling you, the sharks are circling. And those new customers will get eaten alive just the same way as the existing customers of private insurance companies are.

Health-insurance premiums have been rising at about 6 percent a year. If that continues, the nonprofit Kaiser Family Foundation says the average family policy will cost more than $24,000 within 10 years.

EDWARD Hanway: I certainly don’t agree that it’s a gift to the insurance industry.

Edward Hanway is the CEO of CIGNA, one of the country’s biggest insurance companies. Hanway says the overhaul will require the industry to make its share of sacrifices, too. For instance, it would create new taxes on insurance companies. And they would no longer be able to deny coverage for pre-existing medical conditions, nor would they be allowed to charge more for them.

Hanway: So no, I don’t think we quote dodged a bullet. This is an industry that seriously wants to see reform, and wants to be an active partner with people in getting reform done, and done the right way.

LEN Nichols: Part of what insurers want frankly is survival. Cause they see that there’s desperation to do something about health-care costs and health-care cost growth.

Len Nichols is with the New America Foundation, a non-partisan think-thank in Washington. Nichols says insurance companies have realized they’ll have to accept more government regulation and now they’re trying to get the best deal they can.

Nichols: You’re much more likely to get cooperation and reasonable accommodation of your most intense concerns if you’re in the room.

Insurance companies have been more than just in the room. They have hundreds of lobbyists, and have made millions of dollars in campaign contributions. The end result, says California Lt. Governor John Garamendi, is a bill that would do little to contain the soaring cost of premiums.

Garamendi: If you don’t have an enforcement mechanism, then God help the consumer. Because there isn’t going to be anybody else out there to help them.

The insurance industry says there are some good cost controls in the Senate Finance Committee bill, but they’re mainly geared at hospitals and doctors. There are also new taxes on insurance companies. CIGNA CEO Edward Hanway says he’d rather see lawmakers focus on the delivery of care.

Hanway: Do we have some concern relative to the level of taxation of our industry? We do. We’re concerned ultimately that simply may just add cost, as opposed to reducing cost. But certainly in terms of the outline of that bill, there’s a lot there that we’re supportive of.

That’s exactly what makes consumer advocates so nervous.

I’m Joel Rose for Marketplace.

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