We’ve been covering the dangers of a pure regulatory structure to deal with insurance company abuses, rather than competition through a public option, for some time, mostly in real time during the health care debate. It didn’t take the insurance companies more than a few minutes once the Affordable Care Act was passed to dispute a key passage about pre-existing conditions for children; I suggested they were using the issue as an excuse to raise premium rates.
Dan Froomkin now sizes up the insurance industry’s next move, and agrees that they will scrap for every advantage to turn the ACA even more to their advantage. Froomkin quotes some experts in this long game from the insurance companies:
“This is what you’re going to see as each element in this plan comes up for implementation,” said Marcia Angell, a former editor of The New England Journal of Medicine who now teaches at Harvard Medical School. “This insurance industry is going to give up nothing.”
In the short run, companies are expected to keep doing what they’ve been doing, which means, among other things, jacking up their rates. “There’s nothing to stop them from raising their premiums, and that’s what they’re going to do,” said Angell, a supporter of “single-payer” health insurance [...]
“In the meantime, they can continue to cherry pick the healthiest customers, while foisting the sick into the new high-risk pool,” said Wendell Potter, a former senior health insurance executive at CIGNA who went rogue and became a consumer advocate.
That’s only the beginning, though.
“They also will continue to try to shift more and more of the cost of health care from them to the people that are enrolled in their plans,” Potter said. That involves moving people currently in managed care, with its relatively modest co-pays, “out of those plans and into high-deductible plans that make people pay thousands of dollars before the company will pay a dime,” Potter said.
“Managed care was last decade’s silver bullet,” he told HuffPost. “The new silver bullet for the insurance industry is the high-deductible plan. More and more people will not get a dime from their insurance companies.”
Megan Carpentier helpfully lists ten ways the insurance industry will simply maximize profits at the expense of their customers. Among the more devious ways? Making it more difficult for doctors to fill out claims, reducing insurance company payouts (this is basically like skipping out on the check after a meal); marketing only to healthy people, like putting the insurance office on the top floor of a building with no elevator; using current overhead expenses as part of the “medical loss ratio” that’s supposed to direct premium dollars into medical treatment; and using the “unhealthy behavior” loophole to try and expand the community rating adjustment well beyond just smoking.
We’ve talked about all of these before. But I don’t think supporters of reform are ready for the bonanza of lobbying that will focus on implementation of the regulations:
Thomas J. Donohue, the (US Chamber of Commerce’s) president and chief executive, sent a letter to the group’s board members late Monday detailing an aggressive strategy to blunt the impact of the new law. Mr. Donohue said the business lobby would seek changes to regulations to “minimize the potentially harmful impacts of this bill on our members and the country.”
If regulators “exceed legislative mandates or try for end-runs around the lawful rulemaking process,” he wrote, the chamber “will take legal action.”
“The Chamber is going to carry a message across the country that says the health care debate is not over,” Mr. Donohue wrote. The law “is a major step in the wrong direction and will prove to be a serious drag on our economy and the nation’s fiscal solvency.” [...]
The chamber plans to assign a team of its most experienced staff “to participate in the years-long process of writing the thousands of pages of federal regulations that will implement the many provisions in the legislation,” Mr. Donohue wrote. While the chamber can’t actually write those provisions, it can lobby for certain language and technical corrections.
That’s the new battleground. The National Association of Insurance Commissioners have the task of writing many of the regulations that will govern insurance companies, and according to Wendell Potter, at a recent NAIC meeting he saw 1,700 representatives of the insurance industry, balanced by just 29 consumer representatives. Never mind the state-level regulations governing the exchanges that will have to be written; if anything those officials are even more captured by industry.
I don’t think you needed to be Nostradamus to figure this out. The regulations are the soft spot where industry lobbyists know how to navigate much better than anyone looking out for consumers. Basing the entire reform on a regulatory regime inevitably exposed it to this kind of danger.