EMAIL SIGN UP!
Most Popular This Week
- 21 Ways the Canadian Health Care System is Better than Obamacare
- Developing: Earthquake Hits Japan Amid Fukushima Fuel Rod Removal
- Naming Names: The 90 Companies Destroying Our Planet
- Dump It in the Ocean: TEPCO's Plan for Radioactive Fukushima Water
- The Obamacare Disaster and the Poison of Party Loyalty
Today's Top News
The Health Insurers Have Already Won
How UnitedHealth and rival carriers, maneuvering behind the scenes in Washington, shaped health-care reform for their own benefit
As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group (UNH), Aetna (AET), and WellPoint (WLP). The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable. Health reform could come with a $1 trillion price tag over the next decade, and it may complicate matters for some large employers. But insurance CEOs ought to be smiling.
Executives from UnitedHealth certainly showed no signs of worry on the mid-July day that Senate Democrats proposed to help pay for reform with a new tax on the insurance industry. Instead, UnitedHealth parked a shiny 18-wheeler outfitted with high-tech medical gear near the Capitol and invited members of Congress aboard. Inside the mobile diagnostic center, which enables doctors to examine distant patients via satellite television, Representative Jim Matheson didn't disguise his wonderment. "Fascinating, fascinating," said the Democrat from Utah. "Amazing."
Impressing fiscally conservative Democrats like Matheson, a leader of the House of Representatives' Blue Dog Coalition, is at the heart of UnitedHealth's strategy. It boils down to ensuring that whatever overhaul Congress passes this year will help rather than hurt huge insurance companies.
Some Republicans have threatened to make health reform Obama's "Waterloo," as Senator Jim DeMint of South Carolina has put it. The President has fired back at what he considers GOP obstructionism. Meanwhile, big insurance companies have quietly focused on what they see as their central challenge: shaping the views of moderate Democrats.
The industry has already accomplished its main goal of at least curbing, and maybe blocking altogether, any new publicly administered insurance program that could grab market share from the corporations that dominate the business. UnitedHealth has distinguished itself by more deftly and aggressively feeding sophisticated pricing and actuarial data to information-starved congressional staff members. With its rivals, the carrier has also achieved a secondary aim of constraining the new benefits that will become available to tens of millions of people who are currently uninsured. That will make the new customers more lucrative to the industry.
Matheson, whose Blue Dogs command 52 votes in the House, can't offer enough praise for UnitedHealth, the largest company of its kind. "The tried and true message of their advocacy," he says, "is making sure the information they provide is accurate and considered."
Representative Mike Ross, an Arkansas Democrat who leads the Blue Dogs' negotiations on health reform, also welcomes input from UnitedHealth. "If United has something to offer on cutting costs, we should consider it," says Ross, a former small-town pharmacy owner. "We need more examples that work, and everything should be on the table."
Fifteen years after the insurance industry helped kill then-President Bill Clinton's health-reform initiative, Ross is frustrating the Obama White House by opposing proposals for a government-run insurance concern that would compete with private-sector companies. The President argues that without a public plan, premiums and medical bills will remain prohibitively high. Ross and Matheson have given strong voice to the industry's contention that such a public insurer would actually reduce competition by undercutting private plans on price and driving them out of business. "We have concerns about a public option if it's not done on a level playing field," Ross says.
Obama launched his Administration vowing to extend coverage to all Americans and help pay for it by reining in insurance costs. Seven months later, insurers and pharmaceutical manufacturers that appeared vulnerable to a regulatory crackdown have been welcomed to the negotiating table by the President's own party.
The several competing bills pending in Congress would guarantee all Americans access to health coverage, addressing the plight of the 47 million who are now uninsured. Congress plans to achieve that by expanding Medicaid, the government program for the poor and disabled; requiring insurers to accept all applicants regardless of their health; and mandating that everyone purchase coverage. Government subsidies would make the obligatory coverage more affordable. The legislation would do little, however, to slow spending by Medicare, the public program for senior citizens, or cut overall medical costs. Congress is considering taxes on the wealthy and on benefits now provided to many white-collar workers.
During the UnitedHealth road show in July, Democrat after Democrat clambered into the company's promotional vehicle beneath a sign declaring: "Connecting You to a World of Care." Judah C. Sommer, who heads the company's Washington office, looked on with satisfaction. "This puts a halo on us," he explained. "It humanizes us."
And that Democratic proposal to tax insurance companies? It seems to be fading after the industry said it would raise rates for workers and their families.
UnitedHealth's relationship with Democratic Senator Mark R. Warner of Virginia illustrates the industry's subtle role. Elected last fall, Warner, a former governor of his state and a wealthy ex-businessman, received a choice assignment as the Senate Democrats' liaison to business. The rookie senator landed in the center of a high-visibility political drama-and in a position to earn the gratitude of a health insurance industry that has donated more than $19 million to federal candidates since 2007, 56% of which has gone to Democrats.
UnitedHealth has periodically served as a valuable extension of Warner's office, providing research and analysis to support his initiatives. Corporations and trade groups play this role in all kinds of contexts, but few do it with the effectiveness of the insurers. In June, Warner introduced legislation expanding government-backed Medicare and Medicaid coverage for hospice stays for the terminally ill and other treatment in life's final stages. The issue isn't a top UnitedHealth priority. But the corporation wanted to help Warner with his argument that in the long run, better hospice coverage would save money. UnitedHealth prepared a report for lawmakers finding that 27% of Medicare's budget is now spent during the last year of older patients' lives, often on questionable hospital tests and procedures. Expanded hospice coverage and other services could save $18 billion over 10 years, UnitedHealth asserted.
When Warner went to the Senate floor on June 15 to offer his bill, he cited those exact figures. He thanked the company for its support and put a letter from UnitedHealth applauding him in the Congressional Record.
Warner acknowledges in an interview that he worked on the hospice-care legislation with UnitedHealth executives. But he stresses that he has long experience with health issues and has formed his own views. The senator echoes UnitedHealth's contention that a so-called public option could be a "Trojan horse for a single-payer system," meaning government-run medical care. Warner has heard from some of UnitedHealth's largest employer clients, such as Delta Air Lines (SWY). Delta CEO Richard H. Anderson, a former UnitedHealth executive, has told Warner and other lawmakers that big companies don't want government to limit their flexibility in crafting employee health benefits.
Click here to read the rest of the article.