White House Blasts Health Insurers’ Report on Costs of Reform Bill

By and | October 13, 2009

The White House Monday blasted a report from the health insurance industry that said Senate healthcare legislation would lead to increases in annual insurance premiums of as much as $4,000 by 2019.

The report for the industry trade group America’s Health Insurance Plans represented a shot across the bow at Democratic plans to overhaul the $2.5 trillion healthcare system as President Barack Obama has been gaining momentum on the issue.

A top goal of Obama in seeking to revamp healthcare is to rein in costs that have soared in recent decades. The report, prepared by consultants PricewaterhouseCoopers and posted on the industry group’s website over the weekend, said costs would increase for Americans rather than decline.

“Health reform could have a significant impact on the cost of private health insurance coverage,” the report concluded.

The report’s release comes as the Senate Finance Committee plans to vote Tuesday on its healthcare bill after budget analysts gave it a rosy report card, saying it would meet Obama’s goal of reducing the budget deficit over 10 years.

A Finance Committee aide called the report “blatantly false and misleading.”

The finance panel bill calls for sweeping insurance market reforms, requires most individuals to obtain medical policies and provides tax subsidies to help people afford coverage. The bill also would tax high-cost insurance plans and would place a $500,000 limit on the amount of executive pay that health insurance companies could deduct from taxable income.

The insurance industry group, which represents Aetna Inc, Cigna Corp, UnitedHealth Group Inc, WellPoint Inc and others, defended the report, saying lawmakers have abandoned any effort to slow healthcare costs.
Instead, the bill looks to raise money from insurance companies and, ultimately consumers and employers, to help pay for healthcare costs that outpace wages each year, the group’s president Karen Ignagni told reporters.

“Because we don’t see comprehensive cost control in any piece of legislation, we’re looking at continuing those projected 6.2 percentage point increases … I think it’s time to bring that back,” she said.

A spokesman for Senate Finance Committee Chairman Max Baucus said the report “excludes all the provisions that will actually lower the cost of coverage,” including tax credits and an increased enrollment.

The Obama White House had sought to work with the industry but the report was a clear indication that this strategy was no longer operative. It has brokered deals with drugmakers and hospitals, but no such deal has been struck with insurers.

“This is a self-serving analysis from the insurance industry, one of the major opponents of health insurance reform,” White House spokesman Reid Cherlin said. “It comes on the eve of a vote that will reduce the industry’s profits. It is hard to take it seriously,” he added.

Ignagni, asked about whether the group was changing tactics, said its strategy is consistent and that the group was committed to working with Congress to pass reforms.

But she added that other sectors need to play a greater role in reducing healthcare spending rather than imposing taxes and fees.
“We need now to have a broader discussion about how all the other stakeholders fit into this … conversation,” she said.

The industry group’s report identifies four key factors in the Senate Finance Committee bill it says will drive up the cost of health insurance premiums, including a weak mandate that could result in many young people opting not to buy insurance.

A weak mandate coupled with measures preventing insurers from barring people with pre-existing conditions will fuel rapidly rising costs, as will other factors like taxes on high-cost healthcare plans and new taxes on some healthcare sectors, the report said.

A family of four under current law could expect to pay $15,500 by 2013, but that would rise to $17,200 if the new measures were adopted, the report found. The cost would be $21,900 by 2019 under the current system or $25,900 if the changes are implemented, it said.

“Efforts to increase coverage and promote quality could lead to a more efficient healthcare sector, but they could also lead to increased growth in costs if implemented without a full appreciation of the downstream impact on cost of health insurance coverage,” the report said.

The non-partisan Congressional Budget Office last week put the cost at $829 billion, below Obama’s $900 billion goal.

Senate Republican leader Mitch McConnell said the industry group’s report should not be ignored.

“Higher premiums, higher taxes, and more government — that’s not reform. But that’s precisely what the American people, the Congressional Budget Office and now outside experts have identified with this $1 trillion experiment that cuts Medicare, raises taxes and premiums, and threatens the health care options that millions of Americans enjoy.”

A number of consumer advocacy groups that back reform echoed the White House’s criticism, calling the report a scare tactic meant to derail Tuesday’s Senate vote. They also pointed to insurers as a main driver in ratcheting up healthcare costs over the years.

Recent data shows premiums for health plans sponsored by employers, who provide coverage for most non-elderly adults with insurance, have more than doubled in the last decade.

“The insurance lobby now claims that health care reform will cause significant premium increases, conveniently forgetting that they imposed significant premium increases during the past decade that are making health coverage unaffordable for families and businesses,” said Ron Pollack, head of the consumer health group Families USA.

(Additional reporting by Donna Smith and Susan Heavey; Editing by Eric Walsh)

Was this article valuable?

Here are more articles you may enjoy.