Wednesday, March 25, 2009


The health insurance industry must be feeling the heat. Yesterday, representatives from the industry made a rather dramatic announcement, according to the New York Times:

The health insurance industry said Tuesday that it was willing to end the practice of charging higher premiums to sick people if Congress adopted a comprehensive plan that provided coverage to all Americans.

The industry’s flexible position on the issue came as a surprise to lawmakers, and could make it easier to reach an agreement in Congress because it narrows the issues on which insurers are ready to fight the Democrats who control Congress and the White House.

Now, this really is a dramatic reversal. The insurance industry has long taken the position that it was necessary to limit coverage (or to deny it) to those with pre-existing conditions such as heart disease and diabetes or a history of cancer. If coverage was granted, the premiums had to be high or rates for younger, healthier people would have to be raised to the point that those customers would choose to go without coverage.

In the past, insurers have warned that if they could not consider a person’s health in setting premiums, the rates charged to young, healthy people would soar, making coverage unaffordable.

But Karen M. Ignagni, president of America’s Health Insurance Plans, a major trade group, told lawmakers on Tuesday that insurers were exploring ideas to prevent such increases by spreading the risks and costs across a larger population of both healthy and unhealthy people.

Why the change of heart? Well, one of the ideas on the table is a single payer system in which the government would compete with private insurers. While Medicare may have its problems at the present time, the program does operate at a much lower administrative cost than insurers. It is likely that the new programs would duplicate that efficiency to the extent that premiums would be so much lower than those of private insurers that people would overwhelmingly choose the government program. The industry isn't having any of that, thank you.

Insurers said they were still staunchly opposed to creation of a new government-run health insurance plan, which, under many Democratic proposals, would compete directly with private insurers.

And, it's not like the industry has completely capitulated. Its representatives have made it clear that they still intend to base premiums on such factors as age, place of residence, and size of family. Obviously the insurance companies have gauged the mood of the country on the issue and are hoping that one concession will take the pressure off enough that they can still operate at the profits they have enjoyed for decades. They're hoping that this partial re-write of Harry and Louise's script will work the same magic the commercial did back in the 1990s.

If Congressional Democrats blink, of course, it will. Now's a good time to ratchet up some pressure of our own. Calls and letters to our congress critters over the coming weeks and months are going to be necessary. Time to limber up the fingers again.

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Anonymous Anonymous said...

Not good enough. I've got a "community rated" individual policy, and it's totally unaffordable.

5:43 AM  

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