Insurers’ commitment to healthcare reform is only skin-deep

The industry claims to have had a change of heart, but its position hasn’t changed at all.

By Michael Hiltzik
Los Angeles Times
March 9, 2009

In December, the industry’s trade group, AHIP (for America’s Health Insurance Plans) revealed that it had experienced an epiphany and decided for the first time to support the principle of universal healthcare — insuring everyone in America, regardless of health condition.

It described its change of heart as the product of three years of sedulous soul-searching by AHIP’s board of directors, who claimed to have “traveled the country and engaged in conversations about healthcare reform with people from all walks of life.”

As a connoisseur of health insurance lobbying practices, however, I withheld judgment until I could scan the fine print. What I found by reading AHIP’s 16-page policy brochure was that its position hadn’t changed at all. Its version of “reform” comprises the same wish list that the industry has been pushing for decades.

Briefly, the industry wants the government to assume the cost of treating the sickest, and therefore most expensive, Americans. It wants the government to clamp down hard on doctors’ and hospitals’ fees. And it wants permission to offer stripped-down, low-benefit policies freed from pesky state regulations limiting their premiums.

… AHIP Chief Executive Karen Ignagni (told) the Obama summit: “You have our commitment to play, to contribute and to help pass healthcare reform this year.”

Ignagni can afford to be gracious because no specific reform plan is yet on the table. But veterans of the last reform battle warn that the moment concrete proposals appear, the insurance industry will deploy in force to kill anything that threatens its profitability and freedom of movement, such as an expansion of public insurance programs or tighter federal regulations.

Veterans of earlier healthcare battles justly wonder if the industry is merely trying to get in front of the parade, the better to lead it into a dead end.

“It might be that they think reform is inevitable,” says (Jonathan Oberlander, a healthcare reform expert at the University of North Carolina), observing that the industry made very similar noises at the outset of the Clinton effort, before the slaughter started. “I’d say buyer beware. We’ve been there before with them.”

http://www.latimes.com/business/la-fi-hiltzik9-2009mar09,0,4220704.column

And…

In Divide Over Health Care Overhaul, 2 Major Unions Withdraw From a Coalition

By Robert Pear
The New York Times
March 6, 2009

Two labor unions have pulled out of a broad coalition seeking agreement on major changes in the health care system. The action, by the American Federation of State, County and Municipal Employees and the Service Employees International Union, shows the seeds of discord behind the optimistic talk at a White House conference on health care this week.

The most active participants in the coalition include Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group, and Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, which represents drug companies.

http://www.nytimes.com/2009/03/07/us/politics/07health.html?ref=washington

Comment:

By Don McCanne, MD

In December, when America’s Health Insurance Plans (AHIP) released their new report indicating that they were fully committed to reform that would cover everyone, I responded in a Quote of the Day (12/4/08) with the following: “You could not possibly describe a proposal that would better serve the interests of the private insurance industry. They would create a standard of underinsurance, require all of us to purchase their products, and pretend to address affordability issues through tax credits.”

Michael Hiltzik has provided for us a great service by actually reading AHIP’s report – carefully. He confirmed that this industry, which has been so destructive to health care reform efforts in the past, hadn’t changed its position at all.

Yet Washington has rolled out the red carpet for Karen Ignagni, AHIP’s president. She appears at almost every forum on reform and is presented with the microphone with some fanfare, even if she was not scheduled in the agenda. The intensity of the efforts to keep the private insurance industry in control of the process might best be exemplified by President Obama’s Health Care Summit. In closing remarks, President Obama handed the microphone off to Karen Ignagni so that she could express for the national audience AHIP’s phony epiphany.

Robert Pear’s report on the split in a major coalition on reform exposes the sharp contrast between AHIP’s sick-sweet public rhetoric on cooperation, and its back-stabbing, cut-throat, behind-the-scenes negotiations on the specifics of reform.

AFSCME and SEIU, the two unions that pulled out of the negotiations, serve as a proxy that represents the only special interest that really matters – the patients. After half a year of intensive negotiations with AHIP, PhRMA, the United States Chamber of Commerce, and others, it was clear that the insurance industry would not compromise its business interests for the benefit of patients. AFSCME and SEIU had to walk out.

The coalition plans to issue recommendations later this month in a report that reflects “the lowest common denominator,” undoubtedly more sick-sweet rhetoric crafted by AHIP.

(Theoretically the consumers were represented by Ronald Pollack of Families USA, but he has lost all credibility because of his years of insistence that we follow a strange-bedfellows strategy – a process which tragically has only perpetuated health reform inertia. Jonathan Oberlander cautions that “we’ve been there before with them,” but Ronald Pollack’s learning curve is flat. )

Michael Hiltzik is to be praised for his leadership. We can only hope that other influential members of the media follow his example. All they need to do is carefully read AHIP’s own report on its change of heart, and see what it really says. (Hint: I couldn’t find a heart anywhere in the report.)

AHIP’s phony epiphany:
http://www.americanhealthsolution.org/assets/Uploads/healthcarereformproposal.pdf

Report of Health Care Community Discussions

HealthReform.gov
March 5, 2009
In December 2008, the Presidential Transition Team invited Americans to host and participate in Health Care Community Discussions to talk about how to reform health care in America.
IV. Solutions to the Problems in the U.S. Health Care System
B. Roles in a Reformed U.S. Health Care System
Role of Government v. Market
The real debate was over the balance of government versus the market in insuring Americans. Supporters of a single-payer system submitted numerous reports, in part due to the encouragement by advocacy groups to participate in Health Care Community Discussions. Under most versions of a single-payer system, the government would replace private insurers in organizing, financing, and paying for health care. Its specifics, and arguments for and against it, are described below (see Single-Payer System box).
http://www.healthreform.gov/reports/index.html

That’s it. In this long report, this is the paragraph that expresses the ubiquitous single payer presence at these meetings. (The single payer box mentioned was not posted on this web version of the report.)
For those who were expecting a Quote of the Day on today’s White House Health Care Reform Summit, here is the the full discussion of single payer:

HealthReform.gov
March 5, 2009

In December 2008, the Presidential Transition Team invited Americans to host and participate in Health Care Community Discussions to talk about how to reform health care in America.

IV. Solutions to the Problems in the U.S. Health Care System

B. Roles in a Reformed U.S. Health Care System

Role of Government v. Market

The real debate was over the balance of government versus the market in insuring Americans. Supporters of a single-payer system submitted numerous reports, in part due to the encouragement by advocacy groups to participate in Health Care Community Discussions. Under most versions of a single-payer system, the government would replace private insurers in organizing, financing, and paying for health care. Its specifics, and arguments for and against it, are described below (see Single-Payer System box).

http://www.healthreform.gov/reports/index.html

Comment:

By Don McCanne, MD

That’s it. In this long report, this is the paragraph that expresses the ubiquitous single payer presence at these meetings. (The single payer box mentioned was not posted on this web version of the report.)

For those who were expecting a Quote of the Day on today’s White House Health Care Reform Summit, here is the the full discussion of single payer:

Covering the Uninsured: Options for Reform

Kaiser Commission on Medicaid and the Uninsured
Alliance for Health Reform
March 2, 2009
Bradley Herring, Ph.D., Assistant Professor, The Johns Hopkins University, speaking on “Potential Complications with the Different Approaches to Health Reform”:
First off, single payer, HR 676. The underlying appeal of this is essentially that it is very elegant, and simple. You pay taxes into the system and in return you get the medical care that you need. And then also it’s universal. This is probably the only approach that’s actually going to get us to having no uninsured. That kind of notion of being universal – getting everyone covered. This is probably the only one that’s going to do it. But then moreover if you think about universal as having the system in which everybody essentially has got the same kind of coverage, and we’re all in the same boat together – single payer is really probably the only way we might get there. Another thing underlying the appeal about single payer is that there would be large reductions in the administrative costs. So Medicare has administrative costs between about 2 to 3 percent whereas private insurance varies considerably across different markets but averages about 14 to 15 percent.
Potential complications. Well, if you look at the description of single payer, and particularly on John Conyers’s website, it kind of seems like a health care utopia. You get the health care you need, cost sharing is reduced – right now there is pretty significant cost sharing in the Medicare program – and that is going to go away. But I think many of us might agree that somebody’s got to say no, right, that you can’t consume all of the health care that we’d like. Someone’s got to be in place to say no. There are certain treatments that we shouldn’t be receiving or certain patients that shouldn’t receive certain treatments.
Taxes is a big issue, right, so I don’t want to be hysterical. I actually think that taxes should kind of go up a little bit to address the fiscal situation we’re in in the U.S. But many people probably balk at the extent to which taxes have to go up to pay for a single payer. HR 676 includes payroll taxes, increasing from about 1.5 percent to 4.75 percent, on the employee side and the employer side. Repeal the Bush tax cuts. Get in line. Everyone’s targeting these Bush tax cuts – the single most popular pay-for in history. And then on top of that, the proposal would increase the marginal tax rates for the top 5 percent and the top 1 percent of income, an additional 5 percent or 10 percent respectively. And also include a tax on stock transactions.
The final thing I’ll say about single payer is that it most likely is going to result in lower payments to providers. If you look at the MedPAC data comparing private reimbursements and public reimbursements, they’re about 15 to 20 percent lower on the public side.
(Prof. Herring then discusses the three other models of reform: the Republican/McCain proposal, Obama/Baucus proposal, and the Wyden/Bennett proposal)
Q & A:
Audience member (from Center for Budget and Policy Priorities): Dr. Herring and the other panelists, I was wondering if you could discuss the ability of all of the various options to control costs of the health system. If health costs grow at their current rate, no insurance system, no matter how well designed, will be able to cover everyone because we won’t be able to afford it. Thank you.
Prof. Herring: So, off the top of my head, I would think that the single payer approach yields the most promise towards reducing health care costs because it can essentially happen by fiat, right. The government can say what we’re going to spend, and, if Congress is so willing to actually follow through on that, I mean, kind of decide what we’d want to spend. I think the Republican vision of tax reform and getting people into individual plans has a lot of promise for lowering the growth in spending in the sense that people would face strong incentives to purchase cheaper plans with higher deductibles, less access to costly technology, which will certainly, I think, reduce spending, but, taking a step away, we have to ask is that really appropriate? Is that where we want to go? I think the Wyden bill then, in turn, might probably rank third in terms of its ability to reduce the growth in spending. I think for some of these reasons alluded to in the more Republican approach in which there’s a system by which individuals are choosing, on cost, plans – in making decisions to purchase basic versus more comprehensive plans. And then finally I think with the Obama plan, and Baucus’s, the result is that, yes, we might get everybody covered but in a wildly fragmented system that it might be really hard to control costs moving forward with these different things, you know, to kind of plug (moves arms as if plugging multiple leaks in the system).
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=3120

Should we care what Johns Hopkins Professor Bradley Herring has to say about single payer? Emphatically, yes. Prof. Herring is theoretically an academic purist, and has no relationship with the single payer community. Many of his policy studies on private health insurance have been done with Mark Pauly, of “moral hazard” fame. That would certainly place him outside of the single payer camp.
A recent Quote of the Day (2/6/09) covered the OECD working paper, “Health Care Reform in the United States.” My comment was quite critical because the paper ignored single payer while discussing the merits of private insurance reform, especially the work of Jonathan Gruber on the Massachusetts plan. The working paper was coauthored by two staff economists from OECD and, yes, Prof. Bradley Herring. In no way could he be considered to be a single payer ideologue.
Although I transcribed only his comments on single payer, you should listen to him on all four models (at the link above – a transcript will be available soon). He describes single payer as a system that actually gets everyone covered, that you get the medical care that you need, that there would be large reductions in administrative costs, and that “the single payer approach yields the most promise towards reducing health care costs.”
The other three models fall short on these goals, but look at what he says about how they control costs. Each model spends more money on administration in order to control costs by reducing benefits and by erecting financial barriers to care. As Prof. Herring asks, “Is that where we want to go?”
Tomorrow President Obama holds the White House summit on health care reform. A broad spectrum of special interests have been invited, but the single payer community has been explicitly excluded, except for Congressman John Conyers. Does that mean that they will search guests at the door to be certain that none of them bring in a copy of Prof. Herring’s comments? The turfs of the special interests would certainly be threatened by exposing the attendees to sound policy science.