Notice: Undefined variable: galink_author_id in /home/northcoa/public_html/wp-content/plugins/google-author-link/google-author-link.php on line 114

Tag: health insurers

What’s holding up the Senate Finance Committee on health care reform?

Many are extremely frustrated by the slow progress in the Senate Finance Committee, but it looks like one reason for the delay is the serious consideration by the committee for an excise tax on health insurance companies for gold-plated health care plans.

A proposal to tax insurance companies on their most expensive health-care plans may help lawmakers seeking a bipartisan solution for financing President Barack Obama’s $1 trillion health-care plan.

The plan, offered by Democratic Senator John Kerry of Massachusetts, would impose an excise tax on insurers that could generate tens of billions of dollars. Making the companies pay may help break a deadlock in Congress over funding. Obama opposes taxing health benefits for middle-class Americans and many Republicans and Democrats have said they won’t accept a plan to tax the policies of the wealthiest.

“We’re taking an intense look at it,” Senator Charles Grassley of Iowa, the ranking Republican on the Finance Committee, said in an interview yesterday on Bloomberg Television’s “Political Capital with Al Hunt.”

The measure would help end “perverse incentives to over- utilize and have high-cost care,” said Grassley. “We’re interested in it as a discipline within health care.”

Senator Olympia Snowe of Maine, another Republican on the Finance Committee that is drafting health-care legislation, said she was also open to the proposal.

‘Practical Option’

“That may be a practical option, as a way of attacking future costs in health care and driving them down and creating disincentives for the most expensive policies,” Snowe said July 23. Earlier this week, Senator Kent Conrad, a North Dakota Democrat on the Finance Committee, said the idea is under consideration by the panel.

The Kerry proposal is similar to an amendment that Senators Bill Bradley, a Democrat, and John Danforth, a Republican, floated in the 1994 effort to overhaul health care. Obama has said he wants his plan to remake health care, which accounts for 17 percent of the economy, to have bipartisan support.

“It might be a way of accomplishing our goals,” Kerry said.

Grassley agreed. The proposal, he said, has “been a subject of discussion for two days of the last four or five” in the committee.

This is an excellent option given that any proposal to limit the health care deduction for individuals who have gold-plated plans went nowhere for political reasons. The delay must relate to the various ways this can be structured and the need to have it scored properly by the Congressional Budget Office. If the numbers work, this will go a long way towards getting a bill that can achieve broad support and even bring along some Republicans.

Taking on the health insurance companies

Anyone wondering how the health insurance companies have been increasing their profits at such a rapid rate should read this recent article from BusinessWeek. It appears that large health insurers completely dominate the market in many states.

The insurance industry is up in arms over congressional proposals to create a publicly financed competitor in an effort to bring down health-care costs. That may be because it doesn’t have to face much in the way of competition now: Most regions of the U.S. are dominated by just one or two health insurers.

Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market.

Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same.

Ezra Klein makes a similar point in the Washington Post.

In the modern health-care system, there is no higher power than the insurance market. And the insurers who populate that market have grown all the stronger. The Justice Department judges an industry “highly concentrated” if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.

Economics textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period.

We have a system that is not sustainable. This isn’t capitalism – instead we have several large insurance companies practically stealing money from American taxpayers.

Right now, President Obama is trying hard to get a bill with the help of all the major players, including the insurance companies. Therefore we’ve seen him go after costs and premiums, but he has not taken on the insurance companies in a direct manner.

If the current effort at reform fails or stalls, expect to see a full-throttled attack against these companies that informs the American people just how much money they are making and the tactics they are using to deny coverage to pad profits.

© 2021 NorthCoastBlog.com

Theme by Anders NorenUp ↑