Insurers Bristle at Obama's Health Plan

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Official portrait of President-elect Barack Obama on Jan. 13, 2009. (Photo by Pete Souza)

Addressing a joint session of Congress, President Obama yesterday elucidated his vision for health care reform. Excluding his embrace of a public option, Obama’s plan largely mirrored the plan recently proposed by Senate Finance Committee Chairman Max Baucus (D.-Mont.).

Like the Baucus plan, Obama proposes a slew of new rules under which health insurers would operate. These include prohibitions against denying coverage due to pre-existing conditions; eliminating caps on the amount of coverage individuals can receive in a given year or lifetime; and requiring insurers to cover routine checkups and preventive care, such as mammograms and colonoscopies.

“Now, I have no interest in putting insurance companies out of business,” Obama said. “They provide a legitimate service, and employ a lot of our friends and neighbors. I just want to hold them accountable. And the insurance reforms that I've already mentioned would do just that.”  

Yet, Obama pressed ahead with a call for a public option to be made available through a health insurance exchange, a move vehemently opposed by private insurers.

“[Insurers] argue that these private companies can't fairly compete with the government,” he said.  “And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I've insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects.”

After the speech, health insurers pushed back against the inclusion of a public option.

“New health insurance reforms and consumer protections will solve the problem without creating a new government-run plan that will disrupt the quality coverage that millions of Americans rely on today,” America’s Health Insurance Plans President and CEO Karen Ignagni said in a statement. “We share the concerns that hospitals, doctors, employers, and patients have all raised about the significant unintended consequences of a government-run plan.”

Another contentious point for insurers is how the new health plan would be funded. Much like Baucus, Obama proposed a mix of cost savings and new fees on insurance companies.

“Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan,” Obama said. “Now, much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers. And this reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money—an idea which has the support of Democratic and Republican experts.”

Health insurers counter that new taxes on their industry will essentially constitute a new tax for all Americans with private coverage, and thus make coverage less affordable.

“We firmly believe that the President’s goal of enacting health care reform that provides security and stability for all Americans is achievable by strengthening the current system to include both a personal coverage requirement and a helping hand for those who can’t afford coverage,” Philadelphia-based CIGNA said in a statement. “However, levying additional taxes or introducing an unnecessary government-run plan would be counterproductive—turning back the clock on quality, threatening consumers’ access and choice, and worsening the cost-shift burden within the health care system.”

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