HEALTH REFORM: AHIP Got What It Paid For

When a lobby -- like AHIP, the health insurance lobby -- pushes out a report intended to inflict last minute damage on an important bill late on a Sunday on a three-day weekend, they may score a few points in the first wave of headlines but ultimately the truth wins out. Not only did the second-day headlines (like Politico's "Insurers Face Blowback") note the questions about the AHIP report’s veracity, even the consulting company that wrote the report, PricewaterhouseCoopers, basically said it was a meaningless exercise in the application of irrelevant assumptions. In other words, AHIP got what it paid for.

PricewaterhouseCoopers said:

America’s Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that   focused on four components of the Senate Finance Committee proposal:

• Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.
  
• An excise tax on employer-sponsored high value health plans.
  
• Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers.
  
• New taxes on health sector entities.

The analysis concluded that collectively the four provisions would raise premiums for private health insurance coverage. As the report itself acknowledges, other provisions that are part of health reform proposals were not included in the PwC analysis. The report stated on page 1:

“The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, 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.”

I wrote in more detail about the report’s numerous weaknesses and fallacies yesterday. Basically they took an out of context look at a few provisions, with faulty underlying assumptions and mysterious methodology. It’s sort of like when I was a college professor, if I had flunked a student based on my own extreme assumptions about what she “meant” to write on a couple of incomplete answers, ignoring all her other correct work on a three hour exam. As Ron Pollack, executive director of the health care advocacy 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."

Ironically, one of the insurance industry’s concerns is legitimate – and is shared by me and many of my fellow economists as well as pro-reform advocates who want to cover all Americans in an economically sustainable way that is good for everyone in our society. If the enforceability of the mandate gets watered down too much, there’s a risk that not enough people will be covered, and the new insurance won’t work like it could and the new system won’t restrain costs the way it’s designed to.

But an honest conversation about how to ensure the right outcome will not be engendered by an inflammatory report. I reacted as I did because analysts have to defend the integrity of analysis, otherwise we will truly end up in a “fact free zone” in policy and political debates. Ron Pollack is right, this report didn’t help AHIP, PricewaterhouseCoopers, the Senate, policy analysis, or our nation. In fact, if anything, releasing this report, at this time, in this way may have strengthened the case in some people’s minds for the necessity of having a public option. If this is the kind of stuff  the insurance industry would have us believe, how can they ever be trusted? Some folks have been asking this for some time, and once-skeptical senators may be listening, now.