Health reform heats up, and the insurance industry is out in the cold

The chances of meaningful healthcare reform look increasingly likely. Whether it will be reform we can afford is an entirely different question.
We’ll be taking a look at the differences this time around, and today will begin with the role of the health insurance industry.
Don’t expect to see Harry and Louise return to the small screen (TV or computer); while there may be an occasional sighting, the sponsors of the original edition have refused to let the aging couple out of the retirement home. Fearing a catastrophic backlash, health insurers are doing everything possible to be kindler, gentler, and easier to work with. They’ve got a long way to go, but their path is clear. A 2008 USA Today/Kaiser Family Foundation/Harvard School of Public Health poll had the industry with a 40 percent favorability rating with the public, lower than banks, airlines and drug companies, and half the approval rating of doctors.
Many view insurers as part of the problem, and with the continuous drumbeat of bad press, they aren’t doing themselves any favors. The public and the powerful do not trust healthplans, who have not given either constituency any reason to do so.
To the extent the insurers are able to stay at the table, they are finding their influence is dramatically lower than it was even twelve months ago. Particularly in the House, where Reps. Waxman and (even more so) Stark (D CA) are the powers behind reform, the health insurance industry has few supporters willing to publicly advocate for their views. In the Senate, it’s not so much that health plans have more friends as fewer enemies, and the friends they do have are reduced to yelling from outside the door.
Healthplans did this to themselves. Medicare Advantage was seen by most as a flat-out hand-out to insurers, who grew fat and profitable from overpayments funded by taxpayer dollars. The health insurance industry way overplayed its hand. Braying about the power and brilliance of private industry and its obvious ability to easily outperform the stumbling bumbling bureaucracy while seeking huge subsidies from that selfsame government was a doomed strategy. Hypocrisy is always a tough sell.
The industry is now all-but-prostrate at the feet of Congress, offering to give up medical underwriting, stop charging sick folks higher premiums, and even reduce health care costs – in return for an requirement that everyone buy health insurance. This last is no concession at all, adding huge revenue dollars while also aligning the industry with the powers that be. Win-win indeed; in retrospect this is so obviously good for the health insurance industry that it is amazing Harry and Louise weren’t pushing for universal coverage back in 1992. What’s new is the revelation that underwriting is not only expensive, but unpopular.
Health plans should count themselves very lucky that the President and key Senators refuse to engage in discussion about single-payer, instead proposing to build a new health insurance/care system on top of the existing (mostly) private insurance infrastructure.
But they can’t entirely give up their old ways, as evidenced by the public battle over the public plan option. This is where the industry may well make a catastrophic mistake. The public doesn’t like health plans, seeing them as mean-spirited, bureaucratic, monolithic entities ensconced in huge office buildings with leaders that are paid way too much for their ability to reject patient’s pleas for care while raising rates every few months and underpaying physicians. Now these private insurers and their advocates on the Hill are complaining about the unfairness of a public plan option, one wherein the government would ‘compete’ with private insurers.
In today’s world, the industry’s arguments against a public plan ring false. Opponents complain about faceless bureaucrats coming between patients and doctors; their lobbyists may have forgotten this was the health industry’s business model, but the public sure hasn’t. On a macro scale, voters traumatized by the failure of the mortgage and banking industry are loathe to trust yet another big financial industry to do the right thing; there has been precious little indication that the industry is in any way interested in that strategy.
All but lost in the debate has been the question of cost reduction. The industry’s pledge to reduce costs by two trillion dollars over ten years was quickly withdrawn, after President Obama masterfully maneuvered the industry and their supporters into a made-for-TV press event wherein he lauded them for that commitment. I’d expect to see a replay of that confab more than once as the debate heats up, and insurers will find themselves squirming on an increasingly hot seat as they try to spin their past statements. In so doing they’ll just dig themselves an increasingly deep hole – aren’t healthplans supposed to control costs? If so, why can’t you? And if you can’t, why, exactly, are we relying on you as the foundation for a new health system?
If meaningful reform happens, the primary beneficiaries will include healthplans. Yet another example of why it’s always better to be lucky than good.