The Empire Strikes Back

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AHIP, the insurance industry trade group, has apparently decided to hop off the healthcare reform bandwagon.  After months of claiming that they were on board, they released a report on Monday claiming that current proposals would raise insurance costs for middle class families by about $4,000 more than otherwise projected over the next decade.  It’s a pretty standard lobbyist group effort: the report was written by an “independent” outfit (PricewaterhouseCooper, the same guys who wrote similar reports for the tobacco industry in the 90s), it makes several convenient assumptions, and in the end it comes up with a dramatic and surprisingly precise measure of financial doom for Joe Sixpack and his family.

So what’s the deal?  Is AHIP really trying to kill healthcare reform?  Or is this just a shot across the bow?  There’s no way to know for sure, but Jon Cohn offers up this thought in a postscript to a detailed look at the report:

A friend e-mails, asking if AHIP’s motives are really as clear as they seem. As proof, the friend points to the passage in Ignani’s cover letter calling for more system-wide cost control. AHIP didn’t get a sweetheart side deal like the hospitals and drug industry did. And those sweetheart deals will almost surely mean less cost control. Maybe part of AHIP’s agenda is simply to get more serious cost control, so they don’t become scapegoats for high insurance premiums.

I have my doubts that AHIP is really all that dedicated to cost controls.  What’s more, they did get a sweetheart deal of their own: in return for agreeing to various regulations on preexisting conditions, out-of-pocket caps, and so forth, they got a promise to include an individual mandate in the bill.  That mandate means more people will buy insurance and it’s worth billion of dollars to the industry.

However, the Baucus bill has weakened that mandate.  So the problem may be not that they didn’t get a sweetheart deal, but that they’re afraid the deal is being watered down too much.  There’s even a decent case to be made that they’re right (i.e., that the individual mandate really ought to be stronger than it is in Baucus’s markup).  I wouldn’t be surprised if this report has been on the shelf for a while, with AHIP plugging in the final numbers and releasing it now as a way of warning congressional negotiators that full-scale war is coming unless their bribes are restored to the full level they thought they were getting in the first place.  If that’s the plan, though, it might be backfiring.  Here’s Carrie Budoff Brown at Politico:

This might be the first rift unfolding in public between an industry player and the White House and Senate Finance Chairman Max Baucus (D-Mont.)….Senate Finance Committee spokesman Scott Mulhauser called it “a health insurance company hatchet job, plain and simple.”

“This report is untrue, disingenuous and bought and paid for by the same health insurance companies that have been gouging too many consumers for too long as they stand in the way of reform yet again,” Mulhauser said in an emailed statement. “Now that health care reform grows ever closer, these health insurers are breaking out the same, tired playbook of deception to prevent millions of Americans from getting the affordable, accessible care they need.”

Stay tuned.  AHIP seems to have pissed off quite a few people with this piece of gamesmanship.  We’ll know shortly which side will pay a price for this.

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