Monday, October 12, 2009

AHIP Report: Disingenuous, but pushing toward broader coverage?

Ezra Klein and Jonathan Cohn fisk a PricewaterhouseCoopers study commissioned by the America's Health Insurance Plans (AHIP) purporting to show that the Baucus bill will drive up insurance premiums by a) not putting enough teeth in the individual mandate to purchase insurance, b) imposing new taxes on insurers that will be passed through to customers, and c) driving "cost shifting" from cost-cutting public plans to private plans that will allegedly pick up the slack in payments to providers. Klein and Cohn point out that lower fees paid by public plans should drive the for-profit competition's prices down, not up; that excise taxes on expensive plans should push companies into cheaper plans; and that PwC conveniently omitted the bill's likely impact on buyers' behavior.

All that said, this AHIP response is interesting:
Karen Ignagni, head of America's Health Insurance Plans, the trade group that released the report, stood by its findings. The CBO estimated that the Finance bill would cover 94 percent of legal residents by 2019, but Ignagni said insurers prefer coverage levels in the "high 90s."
Well, so do I, and so do most House Democrats, including the leadership -- who, for that matter, also want to get rid of the excise tax that the AHIP-commissioned report takes aim at. The report may be disingenuous. But it's actually trying to push reform to the left to the extent that doing so means stimulating more spending on health care -- by individuals, the government and employers.

Of course, AHIP is dead-set against the public option, which is designed to drive premium costs down; the argument that it would have the opposite effect on private plans seems particularly disingenuous. Still, the net effect of the pressure effected by this 'research' could be to strengthen and accelerate the move toward universal coverage, through stricter individual mandates softened by more generous subsidies. If the insurers gain those points, and lose on the pubic option, the result could indeed by "coverage levels in the high 90s." Which is still a few points short of where they should be.

UPDATE: Ezra Klein nicely encapsulates AHIP's argument: they want more customers dragooned via a strong individual mandate, but also want to kill all the proposed taxes and cost control measures that make the mandate viable.

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