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Battle over Senate health care bill intensifies

WASHINGTON — Tensions between the White House and insurers exploded into open warfare Monday, with the two sides arguing over what the financial impact of comprehensive health care legislation moving through Congress would be for average Americans.

As the Senate Finance Committee prepared to vote today on a 10-year, $829 billion bill, the insurance lobby warned that under the legislation insurance premiums could rise faster and higher than projected.

The Obama administration said the industry analysis was deeply flawed, and its allies lambasted the industry for hypocrisy and an "eleventh-hour attack" intended to rob President Barack Obama of a victory on his top domestic priority.

"Health insurance companies have been laughing all the way to the bank for generations while people suffer," said Sen. Jay Rockefeller, D-W.Va. "The industry stands today as the greatest impediment to real health care reform."

The back-and-forth was reminiscent of the health care debate of 1994, when insurers and other industry leaders helped defeat a similar effort by President Bill Clinton. On Monday, Obama advisers resurrected a report projecting similar premium increases that the industry lobby issued at the height of the Clinton-era debate to argue that the latest analysis is more of the "same old, same old" attacks.

Until now, Obama had succeeded in keeping most of the major interest groups at the bargaining table with the lure of up to 50 million new customers. But insurers have grown increasingly critical of the Finance Committee bill, saying it does not do enough to bring healthy young people into insurance risk pools.

Although the bill would require every American to carry insurance, the Senate committee approved changes that would postpone and reduce penalties on people who do not meet the requirement. The insurance lobby, armed with an analysis by the accounting firm PricewaterhouseCoopers, said that as a result, older, less-healthy patients would be more likely to buy insurance and drive up total costs.

White House budget chief Peter Orszag, citing estimates by the Congressional Budget Office, said that a new insurance marketplace, dubbed an exchange, could attract 22 million customers by 2015.

"It's hard to see how that doesn't provide adequate risk pooling and scaling," he said in an interview Monday.

Nancy-Ann DeParle, director of the White House Office of Health Reform, said the industry study overlooked other provisions of the bill that should ease premium increases. She said tax credits for small businesses and working-class families would help make insurance affordable.

Provisions that allow people to keep the insurance they have and a lower-priced plan for healthy young people should also hold down costs, she said.

Karen Ignagni, head of America's Health Insurance Plans, the trade group that released the report, stood by its findings. The CBO estimated that the Finance Committee bill would cover 94 percent of legal residents by 2019, but Ignagni said insurers prefer coverage levels in the "high 90s."

PricewaterhouseCoopers predicted that new industry fees, reductions in Medicare growth and taxes on high-priced "Cadillac" policies would be costs passed on to consumers.

Orszag disputed that notion, arguing that the market will respond to those pressures by developing more affordable products.

"Almost every economist believes the effect of the Cadillac provision would be to reduce premiums over time," he said.

As analysts debated the long-term effects of bill that would restructure one-sixth of the economy, Obama's political supporters sought to discredit the insurers.

Ron Pollack, executive director of the pro-reform group Families USA, said the industry report "gives hypocrisy a bad name. … They are like a poker player who complains about his hand when, in fact, he is the dealer."

Late Monday, PricewaterhouseCoopers issued a statement acknowledging it did not look at the entirety of the legislation, only the effects of four provisions that the insurance group wanted analyzed. While not retreating from its findings, PricewaterhouseCoopers underscored an overlooked caveat in its original report: "If other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated."

The firm's study projected that the Finance Committee bill would add $1,700 a year to the cost of family coverage in 2013, when most of the major provisions would be in effect.

Premiums for a single person would go up by $600 more than would be the case without the bill, it estimated. In 10 years' time, premiums would be $4,000 higher for a family plan, and $1,500 more for individual coverage.

Committee aides said it's impossible to predict premiums down to the dollar because there are too many variables involved.

Information from the Associated Press was used in this report.

. FAST FACTS

Major vote is today

The Senate Finance Committee will hold a landmark vote on health care legislation today that is expected to send the bill to the floor. Few, if any, Republicans are expected to support it.

Battle over Senate health care bill intensifies 10/12/09 [Last modified: Monday, October 12, 2009 11:40pm]
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