Pushback grows against insurance industry report
updated 3:57 p.m. EDT, Tue October 13, 2009

By Ed Hornick

WASHINGTON (CNN) — They’re angry and fighting back with full force. Sen. John Kerry, D-Massachusetts, is a member of the Senate Finance Committee.

The White House, Democrats and health care experts are blasting a new  insurance industry trade report that finds that health insurance  premiums for the typical American family would increase by $4,000 by  2019 under a key Senate overhaul plan.

The analysis by America’s Health Insurance Plans indicates that under  the Senate Finance Committee plan — spearheaded by Democratic Chairman  Max Baucus — the costs of private health insurance would rise by 111  percent over the next decade.

Under the current system, costs would rise by 79 percent, the report  said, and premiums for individuals could rise by an extra $1,500 if the  Baucus plan is implemented. The report was conducted by the firm  PricewaterhouseCoopers.

The committee passed the long-awaited $829 billion health care bill by a  14-9 vote Tuesday.

“Imposing new taxes and fees on health care services and on insurance  flies in the face of the goal of reducing health care costs,” Karen  Ignagni, president and CEO of America’s Health Insurance Plans, said on  a conference call with reporters.

Finance Committee spokesman Scott Mulhauser called the analysis “a  health insurance company hatchet job — plain and simple.” And Jonathan  Gruber, a professor of economics at the Massachusetts Institute of  Technology, disagreed with the report.

“This is in addition to all the other benefits that this legislation  will deliver to those consumers — in particular the guarantee,  unavailable in most states, that prices would not be raised or the  policy revoked if they became ill,” he said in a report.  Gruber, also the  director of the health care program at the National Bureau of Economic  Research, says that Baucus’ plan will deliver savings ranging from  “several hundred dollars for the youngest consumers to over $8,500.”  Sen. John Kerry, a vocal health care reform supporter, chastised the the  trade report’s assertions.

“The insurance industry ought to be ashamed of this report,” he said  Tuesday. “It’s a powerful argument, frankly, for why we ought to have a  public plan. It’s a powerful argument for the attitude of an industry  towards this effort.” Watch more on the controversy »

The Massachusetts Democrat said the analysis is “significantly flawed”  and shows that the insurance industry is part of the health care  problem, not the solution.

Wendell Potter, a former insurance company executive turned  whistle-blower, said the report is aimed to shape reform “for their  benefit and at the benefit of Wall Street shareholders, more than  Americans.”

“This is a desperation move on the part of the insurance industry,  because analysts are now somewhat concerned … that the bill may not be  absolutely everything that the industry wants, and that’s what’s driving  this — Wall Street’s expectations that this bill may not be everything  they’d hoped and prayed for.”

The report, meanwhile, came as a surprise to the White House, which had  invited the industry to help negotiate health care reform earlier in the  year.

“What they did here was exclude all of the features of the Senate  Finance Committee bill that lower costs for all Americans,” said Linda  Douglass with the White House Office of Health Reform.  White House spokesman Reid Cherlin added that the report is inaccurate  and self-serving.

“This is a self-serving analysis from the insurance industry, one of the  major opponents of health insurance reform. … It is hard to take it  seriously.”

The America’s Health Insurance Plans analysis also took aim at a  proposed tax on employer-sponsored, high-cost “Cadillac” plans. The  report said they could result in higher premiums for many private  consumers.

In a statement to CNN, the company thareport did not include other provisions that are part of health care reform proposals.

“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,”

PricewaterhouseCoopers said. “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.”  So, what are the facts?

The nonpartisan Congressional Budget Office said recently that quantifying the finance bill’s effects on premiums would be difficult.  The office said that overall premiums would be higher because future  policies would cover pre-existing conditions.

The budget office also pointed a finger at insurance companies,  indicating that 23 percent of some premiums go to administrative costs.  But the Congressional Budget Office analysis showed that the Baucus bill  would reduce the national deficit by slightly more than $80 billion over  the next decade, provide insurance to an additional 29 million people  and extend coverage to 94 percent of the country’s nonelderly  population.

“The idea that the insurance industry would complain about high premiums  is like the Yankees complaining that they’re hitting too many home runs.  It’s totally preposterous,” said Richard Kirsch of Health Care for  America Now, a reform group that says it represents more than 1,000  organizations in 46 states, involving 30 million people.

The insurance industry’s report, meanwhile, also takes a swipe at the  controversial public option — the idea of giving the uninsured the  choice of a government health care plan.

The public option is now backed by the nonprofit group behind Consumer  Reports.

“We’re very strongly in support of the public insurance option as an  option because we think that you can’t get health care costs down unless  there really is true competition in the health insurance marketplace,”  said James Guest of Consumers Union.    Potter, the former insurance company executive, said that without a  public option, insurance companies will continue to have “free rein.”  “And they will, indeed, raise our prices, our premiums to the point that  we can’t afford them and more and more people will be in the ranks of  the underinsured.”