In a letter to leaders of the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committees on Tuesday, America's Health Insurance Plans and the BlueCross BlueShield Association said that their memberships would be willing to end the practice of charging different premiums based on individuals' health status if all U.S. residents were required to obtain coverage, CongressDaily reports (Edney, CongressDaily, 3/25).
The proposal would apply to the individual health insurance market, which provides coverage for about 5% of insured U.S. residents younger than age 65, according to CQ HealthBeat (Adams, CQ HealthBeat, 3/24). The letter stated that the groups still would vary premiums based on other factors, such as members' age and place of residence (Alonso-Zaldivar, AP/Houston Chronicle, 3/24).
Insurers traditionally have said that without the ability to raise premiums for sick members, they would have to charge higher premiums to young, healthy people, but the new proposal indicates that they are considering "ideas to prevent such sharp increases by spreading the risk and costs broadly across a larger population, including the healthy and unhealthy," the New York Times reports (Pear, New York Times, 3/25).
In the letter, AHIP President and CEO Karen Ignagni and BCBS President Scott Serota, wrote, "By enacting an effective, enforceable requirement that all Americans assume responsibility to obtain and maintain health insurance, we believe we could guarantee issue of coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market" (Levey/Girion, Los Angeles Times, 3/25). Ignagni at a Senate HELP Committee hearing on Tuesday said, "When you have everyone in the system, and you can bring (financial) assistance to working families, then you can move away from health status rating" (AP/Houston Chronicle, 3/24). She also said, "This is a major step, and it changes everything about how the market works" (Wolf, USA Today, 3/25).
The letter also stated that insurers would be willing to accept increased regulation of their benefits, underwriting practices and other elements of their businesses, which they believe would eliminate the need for the type of public insurance option supported by President Obama and many Democratic leaders (New York Times, 3/25). Ignagni and Serota wrote, "Creating a new government-run plan would thwart the ability of the health care sector to implement meaningful delivery system reforms, exacerbate the cost shifting from public programs to consumers in the private market and destabilize the employer-based system" (Los Angeles Times, 3/24). Ignagni added that "what we have proposed is an aggressive system of government regulation that would supervise private sector competition, and the competition I think people want" (CongressDaily, 3/25).
Public Option
Other health care industry officials at the hearing said that one of their main goals is to prevent a new public insurance plan, which they see as a detriment to the private insurance market. Ronald Williams, chair and CEO of Aetna, said that a public plan cannot co-exist and compete on an even plane with private insurers because it would be able to leverage its size to set rates that providers must accept, similar to the way Medicare sets payment rates. He noted that providers charge private insurers higher rates to account for the low rates paid by Medicare and other public programs. National Association of Health Underwriters Executive Vice President Janet Trautwein also said it would not be possible for private insurers to compete with a new public option.
However, Karen Pollitz, a professor at Health Policy Institute at Georgetown University, said an expanded public coverage system, which would accept individuals denied by private insurers, is "absolutely essential" (CQ HealthBeat, 3/25).