Headline after headline proclaims that President Obama’s, shall we say, “flexibility” with respect to provisions in his own health care law is creating turmoil among health insurers, as they try to provide
Obamacare-qualified coverage that has become at best a moving target. Well, health insurers deserve every bit of the confusion, uncertainty and potential financial losses they get.
They decided early on they wanted a “seat at the table,” only to discover that the most dishonest presidential administration pulled the chair out from under them.
Health insurers were always going to be the bad guys in the battle over Obamacare. While the law affects virtually every sector of the health care system, it was primarily about health insurance, because of the Democrats’ widely held conviction that the private health insurance industry unethically profits off patients needing medical care.
The primary purpose for the Affordable Care Act was to stop what liberals perceived as health insurer abuses and profiteering.
Much of the “credit” for health insurers’ initial embrace of Obamacare has to go to the head of the industry’s leading trade association, Karen Ignagni, the president and CEO of America’s Health Insurance Plans (AHIP). Ignagni is a registered Democrat and former director of the AFL-CIO’s Department of Employee Benefits.
She joined several health care trade associations at the White House in May 2009 to offer $2 trillion in health care savings. The president used their support to convey the impression of unstoppable momentum, even as Democrats increasingly attacked health insurers. The health insurance industry eventually backed off its initial support, but that resistance was both tepid and conflicted.
At the time I ran a much smaller health insurance trade association, the Council for Affordable Health Insurance. CAHI was created in the 1990s to represent free market-leaning health insurers fighting the Clinton health care reform plan.
CAHI’s adherence to a free market philosophy kept it much smaller than AHIP, but it had several of the same member companies. While CAHI wanted to take a principled stand against the legislation, AHIP did not. Can you say “awkward”?
For example, Democrats wanted to make health coverage “guaranteed issue,” which requires health insurers to accept anyone who applies regardless of their health status. It’s because of guaranteed issue that Obamacare included the mandate to have health insurance—to keep people from waiting until they get sick to obtain coverage.
And once the government requires people to have insurance, it must then decide what the policies’ coverage must include in order to determine who is in compliance with the mandate. And then, understandably, the public demands that if they have to buy coverage it must be affordable, which means government subsidies to lower the cost and, eventually, price controls to keep costs down.
In short, once the government imposes guaranteed issue, the other pieces of Obamacare must follow. AHIP supported the guaranteed issue provision early on; CAHI opposed it. And so pressure was put on CAHI to moderate its opposition so as not to send “mixed signals” about the health insurance industry’s position.
As the ACA was being written and debated, I spent some time talking to the CEOs of some of the member companies. One explained to me how he thought Obamacare would be very good for the industry, another was convinced the Democrats crafting the law were taking their suggestions. They may have been smart businessmen, but they were woefully naive about politics.
I think it is fair to say that several of the health insurers eventually had second thoughts, but by then it was too late. Had the health insurance industry taken a strong, principled stand against Obamacare from the beginning—or even a less-conflicted stand after its initial flirtation—I do not think the law would have passed.
Now those health insurers are being whipsawed by a president who knows nothing about insurance, really wants a single payer health care system, never ran a business, and has no respect for an industry he believes is profiteering on people’s medical conditions.
Some longtime health policy analysts express at least some sympathy for the industry’s current travails (see this piece by Greg Scandlen, one of the country’s top experts and who founded CAHI). Not me. The health insurance industry—or at least the major insurers—jumped into the health care reform battle with its eyes wide shut, and with a certain smugness aimed at those who didn’t get on board.
Now they get to live with and be ruled by the monster they refused to destroy. But the bigger problem is that the rest of us also have to live with that monster.
Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas. Follow at http://twitter.com/MerrillMatthews
