Health care reform legislation has centered around the “public option” — government sponsored insurance — and insurance companies are lining up in opposition.
The proposal has a $1.4 trillion price tag, and would create a government insurance program to compete with private insurance offered by employers. People without insurance also could sign on for a government option.
Opponents say the public option — even if insurance companies could sign up for it — is expensive, would erase competition and could result in employers dropping private coverage in favor of the government plan.
“From our perspective, the one thing we need to focus on is comprehensive coverage,” said Mark Iorio, Colorado vice president for Kaiser Permanente. “If you focus on quality outcomes then you can connect the dots to reimbursement strategies based on those outcomes.”
Without a change in the way health care is reimbursed, “desperate” providers are left trying to navigate the complex reimbursement system, he said.
“And what you get are too many services ordered, too many tests in order to provide adequate reimbursement rates,” he said. “At Kaiser we’ve started some initiatives that have done a good job — creating reimbursement around prevention, around quality outcomes.”
Anthem Blue Cross and Blue Shield is “concerned” that the public option —as well as suggestions to eliminate employer coverage tax exclusions — will contribute to the erosion of the current system.
“Anthem believes the top priority for health reform needs to be improving quality, which can help manage costs,” said spokeswoman Sally Kweskin.
Anthem Blue Cross and Blue Shield executives believe the government option will ruin the insurance business.
“There’s talk of offering the government plan between 30 to 50 percent cheaper,” said John Martie, plan president for Blue Cross and Blue Shield in Colorado. “That will end private health insurance.”
The government option also reimburses at lower levels — which won’t fix the access problem.
“People are going to switch to this option, and then not be able to find a provider,” he said. “It’s going to be like trying to find a doctor for Medicare right now — it’s very difficult.”
Estimates are that 100 million people will sign up for a government option. Currently, 160 million Americans use the employer-based option.
“But the current proposals only address insurance industry,” Martie said. “They don’t address issues of access, of quality, of prevention. All that saves money and cuts costs.”
That belief is echoed by Wellpoint president and CEO, Angela Braly, speaking at a town hall meeting in Los Angeles, earlier this year.
“And 30 percent of what we will spend on health care all year will have no impact on outcomes,” she said. “So, it won’t cure disease, and it won’t prevent them from happening in the first place.”
No IT component
Braly said comprehensive reform should include information technology, as well as improved quality.
“The majority of health care costs are driven by the more than 130 million Americans who suffer from chronic disease,” she said. “Imagine a future where instead of treating those illnesses, we prevented them from happening in the first place… where we talk about how to stay well rather than how to treat sickness.”
Wellpoint said that the “essential ingredient’ for health care reform lies not with the health insurance marketplace, but “downstream.”
“The crisis that is demonstrated by 45.7 million uninsured Americans … is driven by the fact that the rising cost of coverage has priced so many out of the market,” the company said in a report. “These high costs are a function of provider prices and utilization.”
Options that require insurance companies to cover everyone — regardless of health — will create “a dysfunctional marketplace.”
“Study after study has demonstrated that traditional guaranteed issue requirements result in the opposite outcome of the goals of health care reform,” the report said. “Traditional guaranteed issue may indeed be possible if policymakers are willing to establish an effective, enforceable mandate for all individuals to maintain coverage.”
No tax exemption
Insurance companies also are concerned about another discussion going on in the reform arena: removing the tax exclusion for health care premiums. Insurance companies do not believe that removing the exemption —freeing millions to pay for the reform —is a viable option.
“It’s not a long term solution,” Iorio said. “Already, we’ve seen a huge drop in the number of people who have employer coverage. And we’re subsidizing those people already. If we’re going to get where we need to go, we need to do it without penalizing a group of people — and that group of people is getting smaller and smaller.”
Large companies probably would keep employee coverage, as a benefit and a way to attract workers, said Steve Berkshire, professor of health care administration at Central Michigan University.
“But smaller employers will see the public option as a way out of escalating costs,” he said. “It’s a big change. We’ve gone 70 years with employer sponsored health plans. Reform is going to require a change in perspective — even with insurance plans.”
Insurance companies will completely lose the individual market if the current health care legislation passes, Berkshire said.
But for most of them —that’s no great loss.
“Most will tell you that they lose money on individuals,” he said. “That it’s really unprofitable. But when they are faced with losing that market, they may change their tune.”
Berkshire is confident that whatever legislation is approved by Congress will have input from private insurance companies.
“They have quite an active lobby, and they’ve already affected change,” he said. “Whatever comes out of Congress will protect them. Even a publicly controlled insurance plan will have private insurers involved in it — what John McCain suggested. Let people choose the government plan, but the insurers will implement that plan.”