Yamileth Medina

Insurance Companies: Flip-Floppers on Health Care Reform



Posted: Tuesday, October 27, 2009

by
VitalOne Health

One of the strangest aspects of this health care debate has been the role of insurers. Shortly after President Obama was sworn into office, the industry and it's lobbyists (through the group America's Health Care Plans) pledged to support healthcare reform. Even though it would cut into their profit margins, they were willing to compromise on important issues. This was a contrast from their successful torpedoing of the Clinton administration's health insurance reform plan in the 1990s. The government has been striving to insure all Americans, and a key obstacle to that is health insurance companies that refuse to sell policies to people with pre-existing conditions. That dilemma has become more pressing during the recession, as millions of unemployed Americans have lost their employer's health insurance along with their jobs. Underwriting standards are stricter on the open market, since private insurers are unable to spread costs among a large group of employees.

In order to provide coverage to everyone, the major health insurance firms agreed to drop their objection to selling policies to people with pre-existing conditions. In turn, they wanted the federal government to mandate all residents to buy health insurance (albeit subsidized for the working poor). Private insurers are in favor of the Massachusetts healthcare reform model, which penalizes those who are able but unwilling to buy insurance coverage with fines and other deterrents. They believe that the Senate Finance Committee's health reform bill in particular is flawed because it doesn't include deterrents strong enough to prevent people from purposefully going without a health insurance plan until they become extremely sick. Obviously, it would be impossible for them to be profitable and satisfy shareholders if they pay out millions of dollars in claims without receiving premiums from the healthy. Massachusetts has managed to cover 97% of its residents with this strategy, but there have been complaints of cost overruns.

While the industry is willing to provide comprehensive coverage to all, as opposed to a few guaranteed issue health plans with minimum benefits, there are other sticking points with politicians. Prominent Democrats, including Speaker of the House of Representatives are adamant about including a public option in the healthcare reform bill. The possibility of a government-run health insurance plan directly competing with, and undercutting, for-profit insurance companies is something the latter are strongly against. Insurers are also opposed to proposed tax increases intended to cover a portion of the immense cost of reform, according to the Associated Press. Even though Congress has been working with doctors, hospitals, and pharmaceutical companies on reform, negotiations with the insurers have broken down as pressure on the Obama administration to include the public option has increased. Insurers have to consider whether it's worth continuing to cooperate with congressional leaders so they can achieve the goal of passing reform this year, or if it's a better idea for the increasingly vilified industry to cut its losses and fight back in earnest.
Yamileth Medina is an up and coming expert on Health Insurance and Healthcare Reform. She aims to help people realize that they can find quality health insurance plans right now. Yamileth lives in Miami, FL.. Yamileth enjoys listening to music, as well as spending time with family and friends. She lives in Miami, Florida.
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