News Flash: Insurance Companies Will Profit If Status Quo Continues
09:00 AM EST
For several weeks the insurance industry lobby has been releasing alarmist reports about draconian health care premium increases that could result from health reform. Despite being roundly and thoroughly debunked, the insurance lobby continues to release these studies and push their bogus conclusion about cost increases.
Wonder why? Because insurance companies can profit from blocking down reform. A newly identified report from Goldman Sachs looked at the impact of health reform on major health insurance companies and put it in stark terms – insurance company earnings could be cut by 50% over the next decade if the Senate Finance Committee version of health reform passes. The best thing for insurance companies? Maintain the status quo of skyrocketing premiums, soaring profits and a health system that threatens our economy. But according to the Goldman Sachs analysis, insurance companies will also profit if the bills in the House and Senate are watered down and stripped of the key provisions designed to protect consumers and help drive down long-term costs.
It may be good for insurance company profits to push alarmist conclusions in an attempt to water down reform, but these provisions are vital to achieving the President’s commitment to bringing down long-term health care costs:
- A recent Business Roundtable report confirms that Congress is moving in the right direction on both fiscal responsibility and cost containment. The BRT-Hewitt report finds that many of the delivery system reform policies that are currently in health reform legislation will make important contributions to cost reduction, when implemented effectively. As the report explains, "[a] number of the proposed reforms offer real promise, not only to save federal dollars, but also to reduce the rate of increase in private sector spending if adopted and implemented appropriately."
- From the beginning of this process, President Obama has been clear that health insurance reform must not only provide security and stability for Americans with insurance and affordable options for uninsured Americans, but also slow the unsustainable cost growth that is burdening families, threatening businesses' viability, and exploding our national deficit.
- Fortunately, the House and Senate versions of reform share a variety of measures that will reduce the rapid growth in health care costs while also providing Americans with higher quality care including:
- Changing the way we handle hospitalizations, to prevent mistakes and to prevent unnecessary readmissions.
- Creating incentives in the payment system to reward quality of care rather than just the quantity of procedures.
- Giving physicians incentives to collaborate in the coordination of patient care.
- Investing in research into what works and what doesn't in health care.
- Reducing hospital-acquired infections and other avoidable health-center acquired conditions through rigorous reporting and transparency.
- Putting prevention first, rewarding care that focuses on wellness and treating the whole patient in an integrated and coordinated delivery system.
- Tackling the insurance bureaucracy, streamlining the payment system to save time and money that is now spent processing claims and navigating through the byzantine insurance system.
- Establishing a health insurance exchange with a public insurance option, where individuals and small businesses can buy lower-cost insurance that will spur competition and put downward pressure on costs.
- These measures build upon the significant down payment we already made in the American Reinvestment and Recovery Act to begin switching from paper records to computerized records; to strengthen preventive care; to invest in patient-centered health research; and to build up the workforce of primary care providers.
- And there are also ideas that will further control cost growth that have been proposed and are being looked at as the legislative process continues, such as:
- A fee on insurance companies offering high-premium plans — which would create a strong incentive for more efficient plans that would help reduce the growth of premiums.
- Establishing a Medicare commission — which would develop and submit proposals to Congress aimed at extending the solvency of Medicare, slowing Medicare cost growth, and improving the quality of care delivered to Medicare beneficiaries.
Nancy-Ann DeParle is the Director of the Office of Health Reform