Insurance industry groups lay down reform marker

America's Health Insurance Plans and the Blue Cross Blue Shield Association, the two largest insurance industry groups, released a letter today that "laid down a marker on health care, warning in stark terms that a proposed government insurance plan would dismantle the employer coverage Americans have relied on for a half century and overtake the system," the Associated Press reports.

In the letter - Karen Ignagni, AHIP chief and Scott Serota, the head of Blue Cross - write, "A government-run plan no matter how it is initially structured would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget."

"We do not believe that it is possible to create a government plan that could operate on a level playing field. Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market," according to the letter.

But public plan supporters say the opposite would happen, that "competition would force private insurers to cut administrative overhead and profits, putting a brake on costs all around," the AP writes.

The June 19 letter, which was addressed to Sen. Edward Kennedy, D-Mass., makes the point that the insurance industry will accept close government oversight to protect consumers (Alonso-Zaldivar and Werner, 6/23).