Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP)

C-SPAN, March 21, 2014

Karen Ignagni:  I would say that what we’ve learned – and I want to go back to this whole transition point – the reason that the decision was made to allow people to stay in their plans is because there was concern being expressed about ten categories of coverage – no matter how meritorious each and every one of those benefits may be – for an individual purchasing, or a small business, sometimes from where they started, which, in general, the old market had very high deductibles – that’s what people preferred to buy because they wanted to keep their premiums low. Then if you take ten categories of coverage and you have a giant step up, well that is a bridge too far for some individuals. And that was being telegraphed pretty clearly in the fall, not from us but from people who were buying the product and would have to spend more. So I would create a lower tier so that people could gradually get into the program, so they could be part of the risk pool so we don’t hold the healthier people outside, so the process could be working the way it was designed, so we get the healthy and the sick. And I think doing things gradually, just from human nature perspective, it just makes more sense.

Marry Agnes Carey:  Wouldn’t a lot of healthy people congregate in that lower tier?

Karen Ignagni:  Not necessarily. We’re not seeing that right now in the bronze, silver and gold. I think by that hypothesis you would have expected an extraordinary amount of people to buy bronze and they have chosen more silver, which is not as high deductible. So they wanted to lower their deductibles. They’re willing to pay a little bit more per month. But the point is that people are choosing. What I would do is give people more choices. I just… human nature suggests that people like that. They’re in control if they have more choices.

One of the more important goals of health care reform was to require plans to provide comprehensive benefits. Although, as with other compromises in the Affordable Care Act (ACA), the legislation fell short, at least they did require that ten categories of benefits be covered, even if insurers were allowed considerable flexibility within each of the ten categories. Now AHIP – the insurers’ lobby organization – is attempting to dismantle the benefit requirement.Suppose we said that males could decline obstetrical benefits if they wanted to, or females could decline prostate cancer benefits, or non-drug using monogamists could decline HIV/AIDS benefits, or young invincibles could decline all benefits except physical trauma, or whatever, what would happen to the risk pooling function of insurance? Obviously that would violate one of the the most important functions of prepaid health care – pooling all risks. Fragmenting risks into a multitude of pools moves away from prepaid health care for everyone and toward each person becoming responsible for paying for the care they use. At the extreme is requiring everyone to pay full costs in cash. How far along that polarity do we move – moving from bad to worse?

Creating another tier below the lowest current metal level – bronze – meets the desires of insurers who want to expand their markets by offering really cheap plans that exclude major benefits, but it does so at a cost of breaking up the risk pools such that people with expected higher costs are concentrated in comprehensive plans, driving premiums up to ever less affordable levels.

“Erin,” responding on the KHN Blog, suggested that we call this new lower metal tier “pyrite” or fool’s gold.

Look how the insurance industry has manipulated the goals of health care reform:

* We wanted to include everyone, and 31 million people will be left out.

* We wanted to reduce financial barriers to care, and the insurers reduced the actuarial value of their plans by increasing financial barriers to care in the form of deductibles and other cost sharing.

* We wanted to slow total spending to sustainable levels. If that is successful under ACA, it will be accomplished by preventing access to essential health care through limited networks and excessive cost sharing, not through true efficiencies such as are found in single payer systems.

* We wanted to improve quality and instead the insurers sell us more worthless administrative services to play ACO and P4P games.

* We wanted to reduce administrative waste, and instead we add greater administrative complexity through the establishment of insurance exchanges and accountable care organizations.

* We wanted everyone to have comprehensive benefits, and now the insurers bring up the old saw about “giving people more choices” because that puts people “in control” and people “like that.” So let’s strip out their benefits so they can choose cheaper plans that relieve insurers of the pesky need of covering expensive disorders.

Single payer would have achieved these goals, but the insurers keep chiseling away at them to meet their own business needs while sacrificing health care for the people. We can’t seem to fix the insurers, so let’s get rid of them.

(Karen Ignagni said that people are willing to pay more for the silver plans in order to lower their deductibles, but that is not the reason. Since Congress knew that people would select plans with the lowest premiums and thus have grossly inadequate coverage – bronze plans with 60% actuarial value – they prohibited those selecting bronze plans from receiving cost-sharing subsidies for out-of-pocket expenses, forcing them to buy up at least to the still inadequate silver plans with 70% actuarial value. Karen Ignagni knows this, so she was being dishonest by covering it up with the people-liking-choice spin, when all choices are bad – except single payer of course.)