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Monday, October 12, 2009

Is This a "Bombshell"?

That's how Fox News is currently characterizing the new audit done by the American Health Insurance Plans and commissioned by Price Waterhouse Coopers.

After working for months behind the scenes to help shape health care reform, the insurance industry is now sharply attacking the emerging plan with a report that
maintains Senate legislation would increase the cost of a typical policy by hundreds, or even thousands, of dollars a year.


Linda Douglass recently told Mike Emanuel of Fox News that this study was "self serving" and "ignored cost savings measures". There's no doubt that a study commissioned by the health insurance industry about a bill that would greatly affect the health insurance has all sorts of conflicts of interest.

In Chicago, we were supposed to get an objective analysis of the Olympics budget by the Chicago Civic Federation. Instead, we found out that half the federation was tied to the Olympic Committtee and the auditing firm they hired was trying to get business with the city. Drug companies often commission studies to study their drugs. Those studies are much more often than not dubious.

That's one reason why a group like AHIP will commission an auditing firm, in this case Price Waterhouse Coopers. So far, there's no reported conflict from Price.

Still, the study saw two significant problems that will ultimately increase premiums. First, after an uproar, the Senate finance committee lowered the fees significantly for going without insurance. It also mandates that all those with pre existing conditions get health insurance. Such a combination, in the view of the audit, means that far too many folks will go without health insurance until they get sick. Then, they'll get insurance and such combinations will raise health insurance costs significantly.

That's always been the rub, so to speak, with mandating that all those with pre existing conditions get coverage. If someone knows they'll get covered no matter what, they will just wait until they get sick to get covered. There was an uproar over the fees for not getting coverage. Those fees were lowered, and the audit concludes that the lower fees combined with the guarantee of coverage means that far too many will only get coverage when they're sick.

The other problem, according to the audit, is that all the fees, fines and penalties of the insurance and medical industry will simply be passed onto the insured. That's obvious. The bill, according to the CBO, will cost $829 billion over ten years. That won't come from the air. That will come from somewhere. Some of it will come from fees for the uninsured. Others will come from new fees and taxes on insurance companies and the medical industry. As the cliche goes, corporations don't pay taxes, people pay taxes. By this, what is meant is that any taxes on corporations simply get passed onto the consumer. That's what the study concluded as well.

This audit will get some media coverage. I suspect that coverage will be limited to Fox News, talk radio and the blogosphere. I don't know how effective it will be. The public generally dismisses any study from a group with a clear conflict. The White House and the Democrats are certainly not acting as though this study is irrelevant. Both have rushed to condemn it. Usually, that has an effect of raisng the profile of the target. Before watching the response, I would have said that this study would be dismissed because of the clear conflict. Watching Democrats and the White House rush to condemn it, now I am not so sure.

3 comments:

Anonymous said...

This is truly a bombshell. The Health Insurance Industry is attempting to scuttle a health insurance reform bill that, through Max Baucus and Kent Conrad, they largely wrote themselves. Their dishonesty and bad faith has reached Grassleyian proportions.

Sadly, the White House defending the Baucus bill from the report heavily implies that either Obama, or more likely Rahm Emanuel operating through Obama, supports the Baucus bill.

This whole campaign health care reform has become an epic farce on the scale of the "Iraq WMD" debacle. The simple and plain fact that nobody can seriously challenge is that the only real way to curb health care costs is to stop letting insurance companies and hospitals make profit off of it. We need price controls, the kind that only a single payer system can provide.

Would this lead to fewer medical advancements? Possibly but that's not certain. I mean most medical research is subsidized by the government through NIH already. The rest is just companies creating several different ways to cure the same disease so they can patent the treatment.

So that's the issue: would you rather cure cancer or cholera?

mike volpe said...

Price controls create more demand then supply. You understand that right? If you think that pharmaceuticals aren't spending billions on r and d, you need to look at an investor guide for one of them.

Single payer would lead to a lot of people wanting health care and very few people providing it.

Anonymous said...

Mike, there are ALREADY a lot of people who need health care, they just aren't getting it.