The health insurers stumble into an argument for a public option.

How to fix health policy.
Oct. 13 2009 7:05 PM

Harry and Louise, Meet Marx and Engels

The health insurers stumble into an argument for a public option.

Click here for a guide to following the health care reform story online.

Illustration by Robert Neubecker. Click image to expand.

Health reform cleared the Senate finance committee, 14-9, without a public option. Now the trick is figuring out how to put it back in. One powerful argument for doing so comes from an unlikely source: the private health-insurance lobby.

On the weekend before the Senate finance committee vote, America's Health Insurance Plans released a report by Price Waterhouse Coopers stating that the bill would cause premiums to increase 32 percent over the next 10 years. Premiums would rise, AHIP's report said, for seven reasons:

    1. The bill's "individual mandate" (i.e., its requirement that everyone obtain health insurance) had been weakened so much through exemptions and reduced tax penalties that insurers would fail to attract sufficient healthy new customers to offset the new customers in poor health whom they would no longer be permitted to turn away or penalize with higher premiums.
    2. The bill's limit on how much more insurers could charge older people versus younger people would raise premium prices too high for younger people.
    3. New minimum benefit requirements would increase insurers' costs.
    4. The combined effect of the previous three changes would further drive young, healthy people away, requiring health insurers to raise premiums ever-higher for the sickly older population that remained.
    5. A new excise tax on "Cadillac" (i.e., unusually generous) health insurance plans would drive premium prices even higher.
    6. Restrictions on Medicare and Medicaid spending would cause hospitals to shift costs onto private insurers.
    7. New fees on various health industry sectors would drive premiums still higher.

Taken together, these reasons don't argue that health reform needs to be tweaked. They argue it needs to be abandoned altogether.


In a press releaseissued after the finance committee vote, AHIP President Karen Ignani said that her group continued to support "bipartisan health care reform." It was quarrelling only with the finance committee bill's "workability and cost." But most of AHIP's seven reasons for its eleventh-hour objections have been a given with health reform all along.

It was always clear that imposing an individual mandate would have to be done delicately, lest it provoke a rebellion among voters. Distributing the cost of insurance more evenly among different age groups—which is to say, among people who tend to get sick and people who tend not to—was always a central reason to enact health reform. So was the imposition of minimum benefit requirements. Cost-shifting is a reality (albeit somewhat exaggerated by reform opponents; by one estimate, Medicare and Medicaid cost-shifting accounted for only 12 percent of the increase in private health insurance costs between 1993 and 2001). It therefore should surprise no one that putting the brakes on Medicare and Medicaid spending may cause some hospitals to charge private insurers more rather than find ways to spend money less wastefully. But what is the federal government supposed to do? Write a blank check to Medicare and Medicaid? None of these reasons AHIP cites for opposing the bill in its present form can be changed significantly; they're intrinsic to reform. The best AHIP might hope for would be to defeat the tax on Cadillac health plans (substituting, perhaps, the House's surtax on high incomes) and to knock back the other new health care fees.

How does health reform propose to curb rising premiums? The finance committee bill includes several mechanisms for doing so, all of them ignored in the AHIP report. Price Waterhouse Coopers admits this freely; in a press statement released Oct. 12, after the report had caused a furor, it said:

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.


Medical Examiner

Here’s Where We Stand With Ebola

Even experienced international disaster responders are shocked at how bad it’s gotten.

Why Are Lighter-Skinned Latinos and Asians More Likely to Vote Republican?

A Woman Who Escaped the Extreme Babymaking Christian Fundamentalism of Quiverfull

The XX Factor
Sept. 22 2014 12:29 PM A Woman Who Escaped the Extreme Babymaking Christian Fundamentalism of Quiverfull

Subprime Loans Are Back

And believe it or not, that’s a good thing.

It Is Very Stupid to Compare Hope Solo to Ray Rice

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

How Ted Cruz and Scott Brown Misunderstand What It Means to Be an American Citizen

Divestment Is Fine but Mostly Symbolic. There’s a Better Way for Universities to Fight Climate Change.

  News & Politics
Sept. 22 2014 6:30 PM What Does It Mean to Be an American? Ted Cruz and Scott Brown think it’s about ideology. It’s really about culture.
Sept. 22 2014 5:38 PM Apple Won't Shut Down Beats Music After All (But Will Probably Rename It)
Sept. 22 2014 4:45 PM Why Can’t the Census Count Gay Couples Accurately?
  Double X
The XX Factor
Sept. 22 2014 7:43 PM Emma Watson Threatened With Nude Photo Leak for Speaking Out About Women's Equality
  Slate Plus
Slate Plus
Sept. 22 2014 1:52 PM Tell Us What You Think About Slate Plus Help us improve our new membership program.
Brow Beat
Sept. 22 2014 9:17 PM Trent Reznor’s Gone Girl Soundtrack Sounds Like an Eerie, Innovative Success
Future Tense
Sept. 22 2014 6:27 PM Should We All Be Learning How to Type in Virtual Reality?
  Health & Science
Medical Examiner
Sept. 22 2014 4:34 PM Here’s Where We Stand With Ebola Even experienced international disaster responders are shocked at how bad it’s gotten.
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.