Reality Check: WellPoint Analysis Continues the Misinformation Campaign

Reality Check

Constructive debate on health care is always welcome. It's an important part of the process of achieving meaningful reform. Unfortunately, what we've seen out of the insurance industry over the past few weeks can't be categorized as either "constructive" or even a "debate" but rather a misinformation campaign designed to confuse and distract attention from those who are seeking real health care solutions.

The most recent salvo was a set of state-by-state analyses released yesterday by WellPoint claiming that under health reform individual premiums would skyrocket. Like the now widely discredited report from America’s Health Insurance Plans (AHIP) and the deeply flawed Blue Cross Blue Shield analysis, the WellPoint study arrives at its conclusion by cherry picking certain policies and ignoring major aspects of reform that would affect both the number of people covered and the premiums they would pay. Among the policies that WellPoint’s study consciously ignores: special policies for young adults including premium credits and a special "young invincibles" plan; reinsurance to lower the cost of catastrophic care; and the benefits of creating a new health exchange, which the non-partisan CBO says will reduce premiums. As a result, WellPoint reaches almost exactly the opposite conclusion that the Congressional Budget Office (CBO) and other independent health experts have reached about the benefits of health insurance reforms.

Bottom line: if you take a flawed methodology and break it down state by state, you still end up with a flawed result.

The WellPoint analysis did make one novel argument worth noting. It argued that imposing fees on health insurance providers and drug and device makers represents a tax on individuals and families. This is an argument that is being echoed by conservative think tanks like AEI. But the claim does not withstand scrutiny for at least three reasons:

  • First, the idea that the entire fee will be passed on to consumers is not credible – especially given the policy design. The policy assesses a flat amount per year, paid by companies based on their market share, beginning in 2010. The assumption that these companies will accumulate the amount of these fees and pass them along in a lump sum to enrollees later simply does not make sense.
  • Second, these fees are intended to recapture part of the benefits these businesses will get from reform. No one disputes that newly insuring nearly 30 million more Americans will increase their access to needed services – translating into new business for insurers, drug companies and device makers and other providers. This new revenue would far exceed the amount of the new fees – so if you believe that they will pass along the new assessment, they will also pass along their new windfall to consumers.
  • Third, the fees help improve and expand coverage and thus reduce the $1,000 hidden tax tens of millions of Americans pay for the uncompensated care of the uninsured. Even if you believed that somehow companies would find a way to pass the fees along, they would be more than outweighed by the benefits middle-class families would get from not only hundreds of billions of dollars in health care tax credits but from reducing the hidden tax they currently pay for the uninsured.
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