AHIP Says Premiums Will Rise

Costs will rise? Tell us what else is new. We already learned premiums for small business will rise about 15% in 2010.

America's Health Insurance Plans (AHIP) tells us that premiums will rise under reform.

But we already know that premiums must rise under reform because insurance will have to begin to cover health care without tricky loopholes, won't be able to exclude sick people, and can't drop policy holders that become sick.

When Americans will have more of the significant health care costs (the bigger bills) covered by insurance under reform, they will therefore have to pay for this newly-improved coverage through additional premiums, instead of paying those same costs out-of-pocket.

For lower income people, federal subsidies will help pay those premiums. Instead of some dying from lack of basic care, and some going bankrupt or losing their homes, they be able to get good, basic coverage. Some will get coverage for the first time.

For upper-middle-income households (north of $80,000/yr), the increased health insurance premiums will be like taking money from one pocket and putting it in the other. More spent on premiums, less spent out-of-pocket. As this true insuring for health costs occurs, the long term costs of health care become more visible.

This is similar to how the current administration reversed the Bush policy of counting the costs of the wars in Iraq and Afghanistan off-budget (as if the wars didn't count as part of federal spending), and began instead to count the war spending as part of the federal spending and deficit.

Reacting to the House health reform bill, AHIP put out a statement hoping to undercut the public option in the bill by trying to associate the reality of already skyrocketing costs (before reform) with the future under reform as proposed with a public option.

Let me offer the AHIP statement (in red) with my illuminations:

AHIP says:
“The promise of health care reform has been that if you like your current coverage, you can keep it. We are concerned that this proposal will break this promise by increasing health care costs for families and employers across the country and significantly disrupting the quality coverage on which millions of Americans rely today.

My interpretation: We know people change their current coverage often, even every year, and employers are now rapidly dropping coverage or changing coverage, so let's take advantage of the political rhetoric about "keeping your current plan." Our payments to doctors/hospitals/labs are skyrocketing, and the new 2010 premium increases are huge. We don't want a public option competitor, so we'd like everyone to associate the current reality into the future, and imagine it is happening because of coming health reform. We want you to feel that the coming health care reform is responsible retroactively for what is happening to you right now and will soon happen as the new 2010 premiums are unveiled.

“The lack of system-wide cost containment is a missed opportunity. Without a greater focus on health care costs, families and employers will not be able to afford coverage and health care costs will rise at a rate much faster than the overall economy is able to sustain.

We'd love health cost inflation to somehow be controlled by federal regulation, so we wouldn't have to work hard to create new efficiencies and care-coordination innovations on our own. {See my footnote about cost containment at the end of this post}

“We share the concerns that doctors, hospitals, employers, and patients have all raised about the significant disruption a new government-run plan would have on the current health care system. A new government-run plan would bankrupt hospitals, dismantle employer coverage, exacerbate cost-shifting from Medicare and Medicaid, and ultimately increase the federal deficit.

We know that the current finances of health care are already a train wreck, worse than the public realizes. We know this news will be coming in 2010, so let's try to associate this coming reality to the public option, if we can. Many hospitals are already in serious financial trouble -- let's pin that on having a public option in the health care reform somehow. Let's use the disproven canard of "cost-shifting" again. Let's try to use financial fear to fight the public option.

“Estimates show that a government-run plan would cause millions of people to lose their current coverage. Moreover, massive Medicare Advantage cuts would cause millions of seniors to lose their Medicare Advantage coverage altogether, while millions more would face benefit cuts and higher out-of-pocket costs.

We already know for sure that "millions of people to lose their current coverage" is going to happen, no matter what. It's underway. We'd like for Medicare recipents to be afraid of reform. We DO NOT want to lose our Medicare Advantage subsidy, because we pocket 86% of that extra federal subsidy as pure profit for ourselves, and only pay out 14% of that extra money for actual benefits. We'd like people over 65 to falsely think reform will lessen their health care.

“Health plans strongly support comprehensive, bipartisan health care reform and have proposed sweeping insurance market reforms and new consumer protections to ensure that every American has guaranteed access to affordable health care coverage. Experience in the states has shown that insurance market reforms must be paired with an effective personal coverage requirement for these reforms to work. While this legislation recognizes the key linkage of market reforms and a personal coverage requirement, more needs to be done to ensure coverage is affordable and our health care system is sustainable.

Listen, "insurance market reforms must be paired with an effective personal coverage requirement [a mandate] for these reforms to work" -- people, we are actually telling you the truth on this one! If people can just wait until they are sick to buy real insurance, the whole health insurance system is in great danger. But...we'd love it if the main solution for this is to increase the subsidy levels, since that provides the most headroom for us to keep profits stronger.

“As the process progresses, health plans will continue to work to advance bipartisan legislation this year that will cover all Americans, make coverage more affordable, and improve quality.”

We like the "bipartisan" approach, because it has no public option. Please, let's just do some kind of reform, any kind! without a public option. And, let's be sure to increase the premium subsidies for health insurance!

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"Cost Containment"

The "missed opportunity" for cost containment is about what is possible politically, and just exactly how deeper health care delivery reforms could be designed.

Legislators should not feel confident enough to try to specify everything. Indeed, it's better to set up systems that encourage the needed innovation.

Congress has proposed some helpful pieces of cost-reduction, some pilot programs for delivery reform (to change away from fee-for-service) and a panel of experts to recommend changes in Medicare -- IMAC. But even these cautious but good moves toward controlling costs could become a "missed opportunity" if lobbyists can weaken and betray these proposed cost-containment measures in the details of the legislation.

If the currently proposed cost-containment measures are weakened it will be due to influence buying --in plain language, corruption.

Buying influence with money.

Americans call this "bribery" most of the time.

The trillion dollar question now is whether Congress will be bribed this time, now, today, under the spotlight of public attention.

Health care inflation is a bigger issue than the Public Option or even Single Payer. Some of the most crucial kinds of change that will counter the health care inflation are in the way health care is paid for, and proposed legislation attempts to make avenues for significant reform over time by such mechanisms as giving IMAC (modeled on the existing MEDPAC) leeway to innovate. IMAC isn't unchecked -- its proposals would not be enacted unless accepted by Congress and the President. Since future IMAC proposals might limit some forms of easy profit (based on non-market-like structures), the challenge for Congress is to avoid corruption.

The danger is that vested interest groups making contributions here and now -- direct payments (contributions) to Congress from entities that profit from current non-market-like structures likely to eventually be reformed -- will be bribes meant to pay representatives to cripple or reject the proposed legislation.

I'm not sure one way or the other how this will turn out -- whether Congress will resist the bribery this time.