Insurance Industry Sparks a Brawl

Posted October 13, 2009 at 6:32pm

After months of holding its fire, the insurance industry is moving to aggressively push back against health care legislation moving forward in the Senate.

The decision comes after America’s Health Insurance Plans, the trade group for the industry, released a report Monday that said health insurance premiums would rise for the typical American family to $4,000 by 2019 under a key provision in the Senate Finance Committee’s health care bill.

While the White House and Senate Democrats criticized the report’s release on the eve of the Finance Committee vote and more generally that the industry’s findings were inaccurate, some industry lobbyists say they’ve been waiting for this ammunition against some of the recent additions to the Finance panel’s bill.

“If there’s a questionable miscalculation, this thing should have come out a long time ago,— one health care industry consultant said. Insurance companies “were vilified heading into the August recess. … The fact that they continued to try to hope that it was going to be OK for them was irresponsible.—

Up until this weekend, the AHIP had vocally reiterated its commitment to being at the table during the negotiations. For months, the group has publicly supported health care reform hoping it would give it access to a new market of now-uninsured Americans and slow down health care inflation.

That all changed after AHIP President Karen Ignagni sent a memo to the group’s board members Sunday noting the findings of the PricewaterhouseCoopers report.

While insurance companies were given little notice of the group’s decision to release the report, the determination came after the insurance industry was frustrated with the Finance panel’s final product.

The Finance Committee had been perceived as the best venue for passing legislation that the insurance industry could support, but industry lobbyists say that changed after an amendment was introduced at the last minute by Republican Sen. Olympia Snowe (Maine), a key swing vote on the panel, and Democratic Sen. Charles Schumer (N.Y.), an important liberal vote, that removed the individual mandate. The Senators argued that the provision would lessen the burden on people who cannot afford health insurance.

Insurance companies opposed the provision, arguing that without an individual mandate the entire affordability scheme would be thrown off with healthy young people opting against getting health insurance.

The industry is also upset with excise taxes being levied on the industry and a proposal that would tax high-cost, or “Cadillac,— plans, the most expensive insurance policies offered by some companies, which it argues would be passed on to consumers.

“This report is entirely consistent with what we’ve said,— AHIP spokesman Robert Zirkelbach said. “We have raised concerns about the impact specific proposals will have on health care coverage.

“This report confirms those concerns,— he added.

Not all insurance companies are on board with the AHIP’s decision, especially since the report has been met with such strong opposition.

“There is a lot of concern about the way it was handled and the way it played out,— one industry lobbyist said.

Finance Chairman Max Baucus (D-Mont.) didn’t hold back his dislike of the report.

“Quite frankly, it was a very bogus report,— Baucus said. “I read that report. I was quite frankly surprised and embarrassed that they would issue something like that. It did not at all pass the test of rigorous analysis.—

AHIP’s Zirkelbach said the decision was made by the group’s board and the AHIP will continue to press the issues for the industry as it supports overall health care reform.

At the same time, several insurance companies have moved to beef up their own outside lobbying teams as it gets to crunch time on health care reform.

UnitedHealth Group brought on Cauthen, Forbes & Williams and the Glover Park Group, and Aetna hired Alston & Bird in July. Humana also signed on solo lobbyist David DiStefano in August.

But the negative attention the report has gotten has put in jeopardy some insurance companies’ plans of releasing further state-by-state analyses. Blue Cross Blue Shield Association was set to produce several different waves of reports at the state level targeting moderate Senators during the floor debate.

Lobbyists said companies are now rethinking their strategies to include individual meetings with CEOs of nonprofit health insurance plans to make a personal pitch to Senators.

David M. Drucker contributed to this report.