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Ron Brownstein moderated a discussion between SEIUs Andy Stern and AHIP's Karen Ignani -- so, between unions and the insurance industry -- last week and came back enthused over the possibility of reform. The basics of the deal they sketched out are familiar to readers of this blog. AHIP is willing offer everyone insurance, no exceptions, in return for a mandate that forces everyone to buy it. That, of course, is no deal at all. It's like me saying I'll sell anyone a car for a price of my choosing if everyone has to buy a car.The missing ingredient is affordability. And the expectation is that affordability will be guaranteed by "community rating," a policy that ends the ability of insurers to charge different customers different prices based on age, health status, location, etc. At Brownstein's forum, Ignani addressed this, too, and her comments are worth quoting:
She suggested an arrangement in which insurers and the government in effect would divide the cost of insuring the biggest risks through a combination of rating reform and public subsidies. "You have to think about the ratings and the subsidy in tandem," she argued. For instance, she noted, a pure form of community rating--in which everyone is charged the same premium regardless of their age or health status--would substantially increase rates on young healthy families (while reducing them on older or sicker people). In that instance, "you might decide well then we could subsidize those [young] individuals to cushion that," she said. Alternately, she said, you might allow insurers to vary rates somewhat based on age, but use subsidies to ensure that say, "nobody over 55 would have to pay more than 10 per cent of income" for premiums--as California did in its reform. More details on the issue are coming: "You will hear a great deal from us soon about rating," she said.That's actually a fair enough point, and it'll be interesting to see what AHIP returns on rating. But this is one of the reasons that insurers just aren't the main problem on reform. It's easy to see how you buy the insurance industry off and achieve universal coverage. Coverage is the easy part. The bigger problem is cost. And that's harder, in part because the lobbies blocking cost reforms -- pharmaceutical companies, yes, but also device manufacturers and doctors and hospital associations -- are both more powerful and less demonized than insurers. Insurers, at the end of the day, operate from a position of weakness: The public hates them, their business model is increasingly inadequate, and everyone can imagine a health system without their participation. If the crisis goes unaddressed and the system collapses, it collapses atop them. By contrast, people like doctors, need hospitals, and are entranced -- often correctly so -- by the possibilities of drugs and technology. But these are where the costs sit, and if you can't bring the costs down, then it doesn't matter what concessions you can extract from the insurers on coverage. In some ways, a deal with the insurers on coverage is less important in the long-term than a deal with drugs and device manufacturers on comparative effectiveness review, or a policy to refocus the system away from specialists and towards primary care doctors.
