October 12, 2009
As the Senate Finance Committee prepares to vote on Chairman Max Baucus’ (D-M.T.) 10-year, $830 billion health care overhaul plan tomorrow, a new audit by private insurance companies sheds new light on its potential costs.
Industry trade group America’s Health Insurance Plans have released a new study by PricewaterhouseCoopers that “projects the legislation would add $1,700 a year to the cost of family coverage in 2013, when most of the major provisions in the bill would be in effect.”
Premiums for a single person would go up by $600 more than would be the case without the legislation, the PricewaterhouseCoopers analysis concluded in the study commissioned by the insurance group.
“Several major provisions in the current legislative proposal will cause health care costs to increase far faster and higher than they would under the current system,” Karen Ignagni, the top industry lobbyist in Washington, wrote in a memo to insurance company CEOs.
The study projected that in 2019, family premiums could be $4,000 higher and individual premiums could be $1,500 higher.
Baucus’ spokesman, Scott Malhauser, contests the industry’s price study, calling it a “health insurance company hatchet job, plain and simple.”
Baucus spokesman Mulhauser said the study is “seriously flawed” because it doesn’t take into account provisions in the legislation that would lower the cost of coverage, such as tax credits to help people buy private insurance, protections for current policies and administrative savings from a revamped marketplace.
White House health care spokeswoman Linda Douglass concurred. “This is an insurance industry analysis that is designed to reach a conclusion which benefits the industry, and does not represent what the bill does,” she said.
The bill’s review from the Congressional Budget Office last week estimated it would cover 94% of eligible Americans and reduce the federal deficit. But the PwC study was specifically aimed at measuring the cost burden for privately insured individuals.
[The PwC study] concluded that a combination of factors in the bill – and decisions by lawmakers as they amended it – would raise costs.
The chief reason, said the report, is a decision by lawmakers to weaken proposed penalties for failing to get health insurance. The bill would require insurers to take all applicants, doing away with denials for pre-existing health problems. In return, all Americans would be required to carry coverage, either through an employer or a government program, or by buying it themselves.
But the CBO estimated that even with new federal subsidies, some 17 million Americans would still be unable to afford health insurance. Faced with that affordability problem, senators opted to ease the fines for going without coverage from the levels Baucus originally proposed. The industry says that will only let people postpone getting coverage until they get sick.
Other factors leading to higher costs include a new tax on high-cost health insurance plans, cuts in Medicare payments to hospitals and doctors, and a series of new taxes on insurers and other health care industries, the report said.
“Health reform could have a significant impact on the cost of private health insurance coverage,” it concluded.
Insurers played a major role in defeating then-President Bill Clinton’s health care plan in the 1990s. Sunday, the industry stopped short of signaling all-out opposition. “We will continue to work with policymakers in support of workable bipartisan reform,” Ignagni said in her memo.