Insurance industry eyeing potential victories as overhaul efforts progress

Sep 28 2009

For the insurance industry, the health system overhaul currently being considered in Congress so far would create a boon of new customers without the competitive challenge of a government-run option -- both elements that are viewed as victories.

The Wall Street Journal: "But insurers will come out on top only if a requirement that all Americans carry health insurance has teeth. Insurers have argued that the so-called individual mandate is essential to get healthy people paying premiums and balancing out the costs of adding coverage from an influx of sick people." Last week's Senate Finance Committee deliberations "raised the possibility that such an individual mandate could be significantly weakened. Republicans have criticized the provision as an affront to individual liberty." Many worry, however, that sick people could wait until they get sick to buy coverage, driving up cost.

"The industry's other major win contained in the original proposal by Mr. Baucus — the absence of a public plan to compete with private insurers — could also be bittersweet. Instead of a public plan, Mr. Baucus proposed that nonprofit health-insurance cooperatives be formed to provide coverage for those not obtaining it from private insurers. But that idea could pose some of the same problems for the industry as a government competitor would. Government seed money for the co-ops could give them an advantage, and the government might have to take them over should the co-ops fail, executives say" (Johnson, 9/28).

The Los Angeles Times reports on the questioned role of state insurance commissioners in reform: "The National Assn. of Insurance Commissioners currently writes model laws and regulations that individual states are free to accept or discard." Under Baucus' bill, the association "would craft a model rule governing 'health insurance rating, issuance and marketing requirements' that would become 'the new federal minimum standard without any further congressional action.' States would be permitted to deviate from the standards only by appealing to the Department of Health and Human Services."

The Times continues: "In effect, the bill would allow the group to write many of the new rules on issuing and marketing insurance to millions of uninsured Americans who would be required to purchase policies." The group is dominated by the insurance industry and "is a private organization not subject to open meetings and public records law, noted J. Robert Hunter, insurance director of the Consumer Federation of America and a former Texas insurance commissioner" (Zajac, 9/28).