Insurers Jockey For Position In Reform Talks

By dropping their opposition to charging everyone the same amount for coverage, regardless of health status, health insurers took a major step toward a compromise on healthcare reform. However, the quid pro quo—a government requirement that every individual buy insurance—might be harder to achieve than some people believe.

In a surprise move, Karen Ignagni, president of America’s Health Insurance Plans (AHIP), and Scott P. Serota, president of the Blue Cross and Blue Shield Association, told the U.S. Senate leaders in charge of healthcare legislation that their members were willing to stop charging higher premiums to sick people. Earlier, they had signaled their willingness to accept everyone who applied for health insurance—again, in return for an individual mandate. Insurance companies have said all along that “guaranteed issue” of policies would be impossible if people could wait until they got sick to buy insurance.

According to The New York Times, Ignagni told Congress that the health plans are also open to more aggressive regulation of premiums, benefits, underwriting activities, and other business practices.

One reason why the industry may have made this proposal now is that it fears that reform legislation might include a public plan that would compete with private insurers. Sen. Charles Grassley (R-IA), who is very influential in the reform discussions, said that such a provision would be a deal-breaker for him. But even if it isn’t included in the Senate bill, there is a good chance it will be in the House version.

Some Democrats support an individual mandate to buy insurance—something that President Obama opposed on the campaign trail but is now open to. But it is hard to conceive of such a mandate without a requirement that employers either offer coverage to workers or pay into a fund. Such a mandate could exempt small firms, as Hillary Clinton proposed when she was running for President. But if so, it would leave out millions of people. On the other hand, with only 38 percent of small companies offering insurance to their workers, compared with 67 percent in 1995, an employer mandate could create a backlash that would make the response to Bill and Hillary Clinton’s reform plan look like a walk in the park.

So the insurance industry proposal appears to be a positive step until the steep hill that must be climbed to get an individual mandate comes into view. At that point, health reform is like trying to square the circle all over again.