Did insurers put profits ahead of health?

Profiting from health care: If health-care reform falters, insurers may pay a high price

2013-10-07T00:00:00Z 2014-06-17T15:07:49Z Profiting from health care: If health-care reform falters, insurers may pay a high priceBy Lawrence J. McQuillan Arizona Daily Star
October 07, 2013 12:00 am  • 

America’s health-insurance companies sold out for higher profits when they fought for the Affordable Care Act rather than a patient-driven system that would best serve the sick.

Big insurers were omnipresent during the health-care negotiations. Their most effective negotiator was Karen Ignagni, CEO of America’s Health Insurance Plans, the industry’s leading lobby. Washingtonian magazine called her one of the top three “Top Guns” of all trade association heads, and she proved it.

In March 2009, Ignagni promised President Obama: “You have our commitment to play, to contribute, and to help pass health-care reform this year.” And play she did.

Ignagni and AHIP members participated in hundreds of meetings and spent millions of dollars to shape the final bill. Between January 2007 and August 2012, the political action committees of AHIP and the 11 largest health-insurance companies gave $10.2 million to federal politicians, according to Federal Election Commission filings.

They received a lot for their time and money.

The law requires almost every American to buy health insurance or pay a penalty. Nothing was more important to insurers than securing the individual mandate because it will force people to buy their product, many with hefty subsidies.

Just as corn farmers support ethanol subsidies, health insurers support insurance subsidies. Private insurers stand to gain at least 18 million new customers through 2022 due to the health-care law, according to the Congressional Budget Office.

Not everything in the act helps insurers, but they were savvy enough to make sure the net effect of the law helped their bottom line. Stock prices reveal the positive effect on the long-term profitability of the largest health-insurance companies.



It pays to be one of the few sellers of a product the government is going to force everyone to buy and provides subsidies to help them do it.

Insurers were so pleased with the final bill that a month after Obama signed it, Ignagni said her organization was “strongly committed” to its “successful implementation.” In that cause, AHIP became the act’s marketing partner.

AHIP provided seed money to “Enroll America,” a 50-state implementation effort led by Ron Pollack of Families USA. “We are participating in it,” said AHIP spokesman Robert Zirkelbach. “The goal is to get everyone covered.”

Actually, the primary goal is to force coverage on the young, healthy and subsidized — because that will boost the insurers’ profits the most.

Ignagni is now focused on getting Congress to kill the premium tax because that will increase the price of insurance, encouraging people to pay the penalty and opt out of the requirement to buy insurance. 

Health-insurance companies could have fought the health-care legislation, but chose instead to sell out the public

.

Lawrence J. McQuillan is a senior fellow and director of the Center on Entrepreneurial Innovation at The Independent Institute.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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