Obama Plan Would Monitor Insurance Premiums
For the first time in the yearlong debate over health care, President Obama has released his own vision of what a comprehensive overhaul should look like. His blueprint, unveiled Monday, is described as an "opening bid" for this week's summit with congressional Republicans and Democrats.
The president's proposal is largely based on the Senate's health care bill, with some changes designed to win Democratic votes in the House. Obama also included a new wrinkle: The federal government would monitor insurance premiums, and reject those it sees as unreasonable.
"Even if you've got health insurance, what's happened to your premiums lately?" Obama asked participants at a town hall meeting in Nevada last week.
"No matter what your situation, I guarantee your costs have gone up at least double digits over the last year. They have doubled over the last decade. And they're going to more than double over the next decade if we don't do anything."
The president hammered away at the example of a California insurer — Anthem Blue Cross — that threatened to raise premiums by up to 39 percent this year. The White House says that kind of rate hike is just the tip of the iceberg.
Obama's plan would give the secretary of Health and Human Services the power to review insurance premiums and order refunds or reductions if the bills are too high. The idea was first proposed by Sen. Dianne Feinstein (D-CA), who complained that profits at the five biggest private insurers jumped more than 50 percent last year.
"The big, publicly owned medical insurance companies have gotten very greedy, and their profit margins are enormous," Feinstein said.
The health insurance industry argues that its profits represent a tiny fraction of overall health care spending, and says rising premiums are a function of health care costs.
To restrict premiums without regard to these underlying costs "would be like capping the cost automakers can charge consumers, but letting the steel, rubber and technology manufacturers charge the automakers whatever they want," said Karen Ignagni, president of America's Health Insurance Plans, an industry trade group.
Many states already exercise some control over insurance premiums, but enforcement varies. Kansas Insurance Commissioner Sandy Praeger said adding federal oversight could bring some helpful standardization. But she doubts it would put a big dent in the average insurance bill.
"I think we're chasing the wrong tail here," Praeger said. "It's really about health care costs."
Praeger, a past president of the National Association of Insurance Commissioners, said her state already takes a close look at insurance premiums whenever there's a big increase.
"In most cases, the companies have been able to justify them because of the economic situation," Praeger said. "The book of business is probably getting sicker because healthier people are dropping out."
That's the explanation that California's Anthem offered for its proposed increase. During the recession, more healthy people decided they could skip insurance, raising the average cost for insurance customers who remain.
And that's where other parts of the proposed overhaul come in. The president's plan, like the Senate bill, would require nearly everyone to carry insurance. Young, healthy customers would effectively subsidize insurance for everyone else.
"If you add into the mix a fair number of people who have quite a bit lower expected health care expenses, you're spreading [costs] across more people," said Elizabeth McGlynn, a health care analyst at the Rand Corporation.
The proposed overhaul would also create statewide exchanges, where individuals and small businesses could buy standardized health insurance policies.
"A lot of people believe that makes the sort of comparison shopping and, therefore, the competition among insurers more effective," McGlynn said.
Rand estimates these and other provisions of the overhaul could lower health care premiums by 2 to 4 percent over the next decade, reducing the need for the federal government to police those premiums.
The government's power to regulate premiums would be most important in the next few years, before those other provisions take effect.
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On a Tuesday morning, its MORNING EDITION from NPR News. Good morning. Im Steve Inskeep.
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We now know what the president wants in a health care bill. For the first time in the year-long debate, Mr. Obama released his own vision of what a health overhaul would look like. The White House called the presidents blueprint, unveiled yesterday, an opening bid for a summit meeting this week with Congressional Republicans and Democrats. It largely follows the health care bill passed in the Senate, as NPRs Scott Horsley reports.
SCOTT HORSLEY: Much of the money in the presidents $950 billion health care plan would pay to extend health insurance to those who dont have it now. But President Obama is also trying to sell his plan to the majority of Americans who do have coverage.
President BARACK OBAMA: Even if youve got health insurance, whats happened to your premiums lately?
HORSLEY: At a town hall meeting in Nevada last week, Mr. Obama hammered away at the example of a California insurer, Anthem Blue Cross, that threatened to raise premiums by up to 39 percent this year. The White House says that kind of rate hike is just the tip of the iceberg.
Pres. OBAMA: No matter what your situation, I guarantee you your costs have gone up at least double digits over the last year.
(Soundbite of applause)
Pres. OBAMA: They have doubled over the last decade. And theyre going to more than double over the next decade if we dont do anything.
HORSLEY: What the presidents plan would do is give the Health and Human Services secretary power to review insurance premiums and reject those deemed unreasonable. The idea was first proposed by California Senator Dianne Feinstein, who complains profits at the five biggest private insurers jumped more than 50 percent last year.
Senator DIANNE FEINSTEIN (Democrat, California): The big publicly owned medical insurance companies have gotten very greedy, and their profit margins are enormous.
HORSLEY: The health insurance industry argues that its profits represent a tiny fraction of overall health care spending. Karen Ignani, who heads the trade group, Americas Health Insurance Plans, says it would be wrong to regulate insurance premiums without addressing the underlying costs of doctors, hospitals and pharmaceuticals.
Ms. KAREN IGNAGNI (President and CEO, Americas Health Insurance Plans): This would be like capping the price automakers can charge consumers but letting the steel, rubber and technology manufacturers charge the automakers whatever they want.
HORSLEY: Many states already exercise some control over insurance premiums, but enforcement varies. Insurance Commissioner Sandy Praeger of Kansas says adding federal oversight could bring some helpful standardization. But, she doubts it would put a big dent in the average insurance bill.
Ms. IGNAGNI: Probably not, I think were chasing the wrong tail here. Its really about health care costs.
HORSLEY: Praeger, who is past president of the National Association of Insurance Commissioners, says her state already takes a close look at insurance premiums anytime there is a big increase.
Ms. SANDY PRAEGER (Former President, National Association of Insurance Commissioners): In most cases, the companies have been able to justify them because of the economic situation. The book of business is probably getting sicker because healthier people are just dropping out.
HORSLEY: Thats the explanation that Californias Anthem offered for its proposed increase. During the recession more healthy people decide they can skip insurance, raising the average cost for insured customers who remain. Thats where other parts of the proposed overhaul come in.
The presidents plan, like the Senate bill, would require nearly everyone to carry health insurance. Health care analyst Elizabeth McGlynn, of the Rand Corporation, says young healthy customers would effectively subsidize insurance for everyone else.
Ms. ELIZABETH MCGLYNN (Health Analyst, Rand Corporation): If you add into the mix, a fair number of people who have quite a bit lower expected health expenses, youre spreading across more people.
HORSLEY: The proposed overhaul would also create statewide exchanges, where McGlynn says individuals and small businesses could buy standardized health insurance policies.
Ms. MCGLYNN: In a way, because you can - you have a better sense of, you know, the price youre paying for insurance.
HORSLEY: Rand estimates these and other provisions of the overhaul could lower health care premiums by two to four percent over the next decade, reducing the need for the federal government to police those premiums. The governments power to regulate premiums will be most important in the next few years, before those other provisions take effect.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.
