Health Insurers Attack Public Option, Cuts

Posted October 27, 2009 at 6:37pm

The health insurance industry, which had been taking a relatively tempered approach to health care legislation, has stepped up its opposition to the overhaul efforts as it has become clear that the final product will not be to its liking.

The industry’s major advocate in Washington, D.C., America’s Health Insurance Plans, has started running television spots in 10 states, including the home state of Senate Majority Leader Harry Reid (D-Nev.), warning senior citizens that their benefits could be slashed.

Reid, of course, made it clear this week that the Senate bill would include a public insurance option — something the industry vehemently opposes.

AHIP blasted Reid’s decision.

“A new government-run plan would underpay doctors and hospitals rather than driving real reforms that bring down costs and improve quality,— AHIP President Karen Ignagni said in a statement.

AHIP released a study, prior to the vote on the legislation by the Senate Finance Committee, that warned that premiums would rise, in part, because of a lack of tough penalties for those who failed to meet the new mandate to sign up for health care plans.

AHIP spokesman Robert Zirkelbach said the health insurance industry would provide data in the coming weeks to underscore its views on the legislation that is expected to come up in both chambers.

“We’re going to continue talking to the American people,— he said. Zirkelbach also said the association plans to continue the TV spots, which include close-ups of anguished older people and claims that “Congress is proposing over $100 billion in cuts to Medicare Advantage.— The ads, which are part of a seven-figure buy, began running in the past two weeks.

Along with Nevada, the industry is also on the air in states with large numbers of Medicare Advantage beneficiaries, including New York, Pennsylvania, North Carolina and Indiana.

The media buyer for the health insurance spots is National Media. One of the partners in that firm is Alex Castellanos, a high-profile GOP media consultant whose portfolio includes top-drawer Republican clients, including George W. Bush’s 2004 presidential campaign. This summer, Castellanos sent a memo to GOP health care advocates outlining how the party should approach the debate with the Democrats. The memo stressed that the key message should be to “slow down the Obama experiment with our health care.—

The health insurance industry is experienced in using paid media to shape public perceptions. In 1994, a predecessor group to AHIP helped sink President Bill Clinton’s ambitious proposal for universal health insurance with the now-famous “Harry and Louise— ad campaign that featured an average suburban American couple discussing their qualms over the health care proposal.

During the current push for health care reform, the health insurance association had, until recently, refrained from running tough ads.

Even so, President Barack Obama and Speaker Nancy Pelosi (D-Calif.) have lambasted the health insurance industry for trying to undermine health care reform, particularly through grass-roots operations, including those at town hall events this summer.

Craig Holman, a lobbyist for Public Citizen, a liberal advocacy group, predicted that now that the public option is likely to be part of both the House and Senate versions, a number of industries will step up their lobbying against the plan.

AHIP’s opposition to the public option was echoed this week by the Business Roundtable, which represents large companies. The business group issued a statement saying the inclusion of the public option “takes reform in the wrong direction.—

As the legislation moves through Congress, the health insurance industry has been shelling out millions of dollars for lobbying. AHIP spent $2.4 million in the third quarter of this year on federal lobbying, according to disclosure reports filed with the Senate last week, compared with $1.9 million in the second quarter and $2 million in the first quarter.

Individual health insurance companies also have high-dollar lobbying teams. Both Aetna and Humana have spent around $2 million each so far this year on federal lobbying.

WellPoint, which runs Blue Cross Blue Shield plans in 14 states, has spent more than $3 million.

WellPoint recently released an analysis of how it had determined the health care reform proposal, without a strong individual mandate, would affect different groups of people in the states that it serves, including Maine, Nevada, Missouri, New Hampshire, Ohio, California and New York.

“This analysis showed there would be significant cost increases for many members that could further exacerbate the cost-shifting and adverse selection process in a reformed health care system,— WellPoint spokeswoman Cheryl Leamon said in a statement. “WellPoint believes that in order to be sustainable we must address the underlying cost and quality issues in our system today.—

However, Sen. Sherrod Brown (D-Ohio), a member of the Health, Education, Labor and Pensions Committee, responded that the WellPoint study was flawed.

“As we get closer to health insurance reform, insurance companies will stop at nothing to scare consumers with incomplete information,— the Senator said in a statement.