Looks like they definitely overplayed their hand. PricewaterhouseCoopers, the consulting company which did the analysis for AHIP, appears not to like the way that people are viewing the biases in the report. They see how AHIP is being tarred, and may fear they are going to be diminished as well. They released a statement:
America’s Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal:
· Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.
· An excise tax on employer-sponsored high value health plans.
· Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers.
· New taxes on health sector entities.
The analysis concluded that collectively the four provisions would raise premiums for private health insurance coverage. As the report itself acknowledges, other provisions that are part of health reform proposals were not included in the PwC analysis. The report stated on page 1:
“The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.”
In other words, we (PWC) did what they (AHIP) asked and nothing more. You should not interpret anything in the report to be representative of what will occur in the real world.
As I was getting back to work, I had one more thought worth sharing.
While I take issue with the pretty huge assumptions in AHIP’s commissioned report, that doesn’t mean that they are completely wrong, either. While it’s unlikely that the incentives encoded into the Senate Finance Bill will fail completely, it’s also unlikely they will succeed completely.
I have said, and will say again, that the flaw in the fragmented way we are approaching health care reform is that it’s going to cost a lot of money. I don’t think those who point that out, and say it may cost more than we think, are necessarily wrong. I also don’t think the bill does enough to contain costs. As such, we are increasing access, but in a pretty inefficient way.
AHIP’s claims may go too far, and their statistics may be a bit overstated, but their sentiment isn’t totally wrong. When you increase access by buying more people private insurance, costs will go up. When you keep compromising on issues that are intended to reduce costs, costs will go up. When you are politically unable to confront the realities of soaring costs in health care, then – yes – costs will continue to go up.
I’m being inundated with emails asking for my thoughts on the AHIP bombshell over the weekend that reform as prescribed by the Senate Finance Committee will raise the rates for health insurance by more than $4000 by 2019.
Look, I simply have to read the full report before I weigh in. So give me some time to squeeze that into my day. But here are some initial thoughts:
- I think this is a likely reaction to the watered down mandate penalties. The only way the insurance companies can swallow the loss of individual ratings was to get 47 million new customers. If healthy people can opt out too easily, this is bad for insurance companies. So they’re pressuring the Finance Committee to think about that.
- This may be a shot across the bow for those seeking reform to give more concessions to the insurance companies, much like doctors and pharma have received.
- On the other hand, I think this may possible backfire. The insurance companies seem to be saying that they will be completely unable to contain the costs of insurance. Ummm…. isn’t that the argument everyone makes for the public option? Many believe that we need the public option to compete with private insurance so that they will be forced to find a way to lower costs. Am I missing something here?
More later after I’ve fully digested the report.
UPDATE: I should have been more explicit. AHIP claims premiums will go up $4000 above what is expected. In other words, they say the bill will add an additional $4000 to whatever crazy amount we expected premiums would already go up already. I imagine if premiums went up only $4000 total by 2019, we’d all be thrilled.
