WP: The Health Benefits Coalition was formed in the ’90s to fight anti-managed care legislation, including the patients’ bill of rights. It was funded primarily by big insurance companies, but it was portrayed as a broad-based business organization. The industry recruited the NFIB (National Federation of Independent Business) to be the primary spokesperson. Insurers and the NFIB have had a long history of being allies.
TL: Can you explain how the industry organized to fight Sicko a couple of years ago?
WP: Through one of its PR firms, it orchestrated a huge behind-the-scenes campaign that involved giving industry allies, including columnists and editorial page editors, very selective and often misleading information about the shortcomings of other countries’ health systems that were depicted as socialistic or government controlled. It created a front group to churn out press releases and statements criticizing the movie, and warning about long waits for care in Canada and the U.K. That’s what went on behind the scenes. What the PR firm advised insurance executives to say to the press was quite different. You might recall hearing executives and industry spokespeople dismissing Michael Moore as an “entertainer” and quickly adding that the movie served a useful role in focusing attention on the need for meaningful health care reform.
TL: What practices will the industry fight to the death to keep?
WP: They will fight to keep flexibility to design benefits as they see fit; in other words, low-cost policies that don’t cover very much. They will insist on flexibility to continue designing more products that shift the financial burden to consumers. That will enable them to market leaner benefit plans, and it will let them market “voluntary” plans to certain employers that have high employee turnover. These plans don’t require financial participation by employers. Insurers want to have the flexibility to continue designing plans that cover less and move further and further away from the concept of insurance to personal responsibility. Insurers want people to have “more skin in the game,” and they want to have less.
TL: What else will they fight strongly for?
WP: They will fight to keep the ability to base rates on age. That will be a way to keep charging the most to people who are likely to be the sickest. That will enable them to offer cheaper policies to younger and healthier people, and that is the market where the competition will be.
TL: If there is an individual mandate, how will the industry benefit?
WP: They have the potential for millions of more health plan enrollees. The ability to have flexible benefit design and base rates on age will allow them to design plans to maximize their profitability.
TL: Why is the industry so powerful?
WP: Over the many years, their PACs and individual executives have contributed to many political campaigns. They’ve hired former members of Congress as lobbyists, such as my former colleague Bill Hoagland, who was a top aide for Senate majority leader Bill Frist and now heads CIGNA’s government relations operation. All the companies have independent lobbying firms working for them. Some are close to Democrats and some are close to Republicans.
TL: How else has the industry strengthened its grip?
WP: Consolidation in the industry into seven dominant carriers makes it more powerful. It has strengthened its grip through mergers and acquisitions. A consequence of this is that, as a few insurers have grown to dominate local markets, doctors and hospitals have organized themselves into powerful conglomerates. As a result, insurers don’t have the bargaining clout they once had with providers and have lost the ability they once claimed to have to control medical costs.
TL: Why is the industry scared of a public plan that would look and act like Medicare?
WP: A public plan could offer the same benefits as a private plan at less costs because it would not have the high administrative costs—which include sales, marketing, and underwriting expenses—associated with most private plans. It would not be under constant pressure from Wall Street to reward shareholders by constantly keeping an eye on the medical loss ratio and earnings per share, another key measure of profitability.