Health-Care Plans Aid Industry
By: Wall Street Journal
By LAURA MECKLER
WASHINGTON — Democratic presidential candidates like to beat up on insurance companies, but there is a lot for the industry to like in their health-care plans — starting with plenty of new business.
“Here’s the potential for a whole new pool of lives for them to cover, with payment behind it,” said Benjamin Isgur, assistant director of PricewaterhouseCoopers’ Health Research Institute, which examined the presidential health plans’ impact on industry. The study, a comprehensive look at health-care plans offered by candidates in both parties, also concludes that doctors, hospitals and other health-care providers would likely benefit since more patients with insurance suggest more would seek care and be able to pay their bills.
The study, to be released this week, also notes risks for insurers, the biggest of which might be a proposal offered by all the leading Democrats that would set up a Medicare-like health plan that would compete with private insurers.
Further, all the Democrats’ plans would hasten the day when government pays the biggest share of the nation’s $2 trillion health-care bill. Already, government pays 47%. Increased spending of $100 billion a year could bring that to 50% by 2011, six years earlier than maintaining the current course.
“Tipping past the halfway mark has broad implications for the industry, which will increasingly depend on government payment, which tends to be less than commercial payment,” the report says.
The leading Democratic candidates all propose boosting spending — by around $100 billion a year — mostly to help people buy private insurance plans. Sens. Hillary Clinton and Barack Obama and former Sen. John Edwards also propose government-organized pools where individuals and small businesses could choose from a menu of mostly private health plans. Tax credits would help those with low incomes pay the premiums.
Democrats are promising to get tough with insurers, principally by requiring them to cover all who apply and preventing them from charging those who are sick more. Those proposals are anathema to the industry, but less so when they are coupled with a mandate that everyone buy insurance in the first place. Without that mandate, insurers fear that sick people will disproportionately seek insurance, without healthy people in the pool to balance them out financially. With a mandate, that’s less of a problem.
The early signals from the insurance industry, which played a major roll in killing health-care reform in 1994, are positive. The industry’s chief lobbyist, Karen Ignagni, president of America’s Health Insurance Plans, says she is encouraged by the debate so far and says her group is focused on trying to get universal insurance enacted rather than stopping it. “At 20,000 or 30,000 feet, we have heard encouraging statements from Democrats and Republicans,” she says.
Still, the little-discussed Democratic provision to create a new government-run option open to all Americans is troubling to the industry. Leading Democrats have all proposed this, partly in an effort to appease liberal Democrats who favor a single-payer system where all health-care bills are funneled through the government.
Mr. Edwards, speaking at a forum hosted by the Kaiser Family Foundation, said his plan will “allow Americans to decide whether they want…government-run health care, or whether they want to continue the private system that we have today.” At a similar forum, Sen. Clinton said: “I believe in choice and competition. Let’s see what happens.”
Implementing such a system will be complex. “If it’s creating a new Medicare-like program, it involves many, many people and many, many complicated decisions, just as Medicare does,” said Robert D. Reischauer, president of the Urban Institute, a think tank in Washington. For instance, how much will doctors and hospitals be compensated for their services?
For insurance companies, this option is disturbing, as it creates new government-run insurance to compete with their products.
The Republican candidates are all supporting tax breaks of some sort to help those who buy insurance on the open market. The study notes that this could further erode the employer-based system of insurance that now provides coverage to 177 million Americans.
“For younger workers, tax incentives favoring individuals’ coverage could create employee demands for cash instead of health benefits,” it says.
Write to Laura Meckler at firstname.lastname@example.org
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