Insurers fight health plan demonization

September 1, 2009
Jill Wechsler
Jill Wechsler

Insurers believe the campaign aims to distract attention away from faltering support for public plan option

House Speaker Nancy Pelosi castigated the health insurance industry for "immoral profits" made by withholding care when a person becomes ill. President Barack Obama also complained about insurance company "record profits" that drive up premiums and costs. Obama has been speaking out across the country in recent weeks about the importance of reform to prevent insurance companies from placing arbitrary caps on coverage and refusing to cover routine checkups and preventive care.

Some Democrats proposed a tax on insurer "windfall" profits, a move that would raise up to $100 billion over 10 years, according to Sen. Charles Schumer (D-N.Y.) and other Senate Democrats. Under pressure from conservative "Blue Dog" Democrats to reduce the cost of health reform, Congressional leaders also are considering an excise tax on high-cost health plans. The "gold-plated" policies usually have no copayments or deductions and few curbs on covered health services, which analysts say drives up healthcare spending.

Industry leaders were stung by these charges, after providing strong support for reform for more than a year. Insurers have advocated an end to excluding patients' pre-existing conditions and to ratings based on health status and gender-provided that was coupled with a universal coverage mandate that brought young, healthy Americans into the risk pool.

Even so, the administration's Healthreform.gov Web site posted a report last month estimating that 12.6 million adults faced discrimination in purchasing health insurance due to pre-existing conditions. The analysis also blasted coverage recisions by insurers following a patient's diagnosis with cancer or other serious condition.

At a press briefing in August, Karen Ignagni, president of America's Health Insurance Plans (AHIP), responded to the efforts "to demonize health plans." The old Washington political playbook would not get anyone covered or transform the nation's healthcare system, she said. She noted that private insurers provide health coverage to more than 200 million Americans, and that only one penny out of every dollar spent on healthcare goes to health plan profits.

Ignagni acknowledged that insurers oppose a government-run plan that would "dismantle employer-based coverage, bankrupt local hospitals and break the promise that if you like your present coverage, you can keep it."

Such a policy would lead eventually to a single-payer system, which she believes most American's reject. Health insurers, she noted, "do not deserve to be demonized or vilified as part of a campaign to distract attention away from the sinking support for a government-run program."

Insurers also responded to accusations about exorbitant fees for beneficiaries seeking out-of-network services. A new survey from AHIP links those charges to the high rates set by physicians who refuse to participate in provider networks or accept insurance rates.

Despite the contretemps, insurers continue to run ads in support of bipartisan health reform. Ignagni urged Congress to take more action to bend the rising healthcare spending curve.

More recently, Reps. Henry Waxman (D-Calif.) and Bart Stupak (D-Mich.) sent letters to 52 insurers asking them to provide details on executive pay and other spending by September 4. AHIP identified the move as a "fishing expedition."