Health insurers pay lip service to reform


The genius of modern marketing is pouring old material into new packaging. Over the years this has given us yogurt in tubes, prechopped salad greens in cellophane bags and, most recently, the health insurance industry’s new image as a friend of reform.

In December, the industry’s trade group, AHIP (for America’s Health Insurance Plans) revealed that it had experienced an epiphany and decided for the first time to support the principle of universal healthcare -- insuring everyone in America, regardless of health condition.

It described its change of heart as the product of three years of sedulous soul-searching by AHIP’s board of directors, who claimed to have “traveled the country and engaged in conversations about healthcare reform with people from all walks of life.”


As a connoisseur of health insurance lobbying practices, however, I withheld judgment until I could scan the fine print. What I found by reading AHIP’s 16-page policy brochure was that its position hadn’t changed at all. Its version of “reform” comprises the same wish list that the industry has been pushing for decades.

Briefly, the industry wants the government to assume the cost of treating the sickest, and therefore most expensive, Americans. It wants the government to clamp down hard on doctors’ and hospitals’ fees. And it wants permission to offer stripped-down, low-benefit policies freed from pesky state regulations limiting their premiums.

As for universal coverage, which is the goal of many reformers (if not yet the Obama administration), the industry will accept a government mandate to take on all customers, as long as all Americans are required by law to buy coverage.

Parsing the insurance industry’s stance on healthcare reform will be of paramount importance this year. President Obama’s healthcare forum on Thursday demonstrated that the administration and Congress are girding for a big push to remake a tattered employer-based system that has left more than 45 million people without coverage.

Given the recent surge in unemployment, the total is almost certainly much higher today -- possibly as high as 50 million, reckons Timothy McBride, a health economist at Washington University in St. Louis. “In the context of the recession, a lot of people are going to be losing their coverage,” he told me last week.

Nor can there be any question that healthcare reform is tied closely to economic advance: Health insurance imposes a rising burden on many businesses and industries, such as auto manufacturing, while the fear of losing workplace coverage discourages employees from launching or joining new entrepreneurial ventures.

In the early 1990s, the health insurance industry scuttled the Clinton administration’s push for reform through its infamous “Harry and Louise” ad campaign, which stoked fears that the Clinton plan would impose a faceless government bureaucracy on Americans’ healthcare system. (This was supposedly inferior to the faceless insurance company bureaucracy already in place.)

The largest insurance company in the country, WellPoint Inc., parent of Blue Cross of California, similarly helped torpedo Gov. Arnold Schwarzenegger’s proposal to cover nearly all Californians last year.

The insurance industry understands that at this moment, with the political establishment thinking reform, it pays to make nice. In a speech not long ago, Sen. Ron Wyden (D-Ore.), who has sponsored a bill that would unlink health coverage from employment but leave a role for insurance companies, warned the industry against trying to scuttle reform as it did under Clinton.

“I told them, if you do what you did then, you may hold off reform for a bit, but you will hasten the day when there’s a government-run healthcare system,” Wyden said.

The warning may have inspired AHIP Chief Executive Karen Ignagni to tell the Obama summit: “You have our commitment to play, to contribute and to help pass healthcare reform this year.” (On the coy and noncommittal scale, this statement rates a 10.0.)

Ignagni can afford to be gracious because no specific reform plan is yet on the table. But veterans of the last reform battle warn that the moment concrete proposals appear, the insurance industry will deploy in force to kill anything that threatens its profitability and freedom of movement, such as an expansion of public insurance programs or tighter federal regulations.

No one should take the summit’s atmosphere of good fellowship as a harbinger of what lies ahead. “Everybody’s very ‘Kumbaya’ right now,” observes Jonathan Oberlander, a healthcare reform expert at the University of North Carolina.

The insurers think government intervention is fine if it applies to customers they don’t want. The way they put it in their reform plan is that we need a system that “spreads costs for high-risk individuals across a broader base” -- the base consisting of all taxpayers, that is.

Who are these “high-risk” individuals, by the way? At an AHIP convention last year, I heard a prominent industry consultant describe the customers the industry is desperate to dump on taxpayers as those with multiple chronic diseases, like diabetes sufferers with asthma or cancer patients with heart problems. He called these people “clinical train wrecks.” (Nice way for someone connected with the “caring professions” to talk, isn’t it?)

AHIP’s commitment to an improved healthcare system is skin-deep. It endorses the quest for lower costs, more efficiency, and the fair and impartial resolution of claims disputes. Achieving these ends always has been within the industry’s power, but it never seems to make any progress toward them.

For example, AHIP says it believes that “administrative processes should be streamlined across the healthcare system.” But at its member firms, the administrative complexity only proliferates.

I know doctors who now have to split their working hours 50-50 between seeing patients and dickering with insurance companies over claims and preauthorizations -- a vast increase over the time they spent on administrative chores a few years ago.

The industry talks a good game about marching for reform side by side with all healthcare stakeholders -- patients, drug manufacturers, doctors and hospitals. Ignagni says her members will “come to the table with real proposals and solutions” rather than “the old-fashioned playbook of ads and 30,000-feet campaigns.”

Veterans of earlier healthcare battles justly wonder if the industry is merely trying to get in front of the parade, the better to lead it into a dead end.

“It might be that they think reform is inevitable,” Oberlander says, observing that the industry made very similar noises at the outset of the Clinton effort, before the slaughter started. “I’d say buyer beware. We’ve been there before with them.”


Michael Hiltzik’s column appears Mondays and Thursdays. Reach him at and read his previous columns at