Broken AHIP

by digby

I guess the insurance industry finally decided they weren't going to get the kind of sweetheart deals that PHarma and the Hospitals got, so they've gone on the warpath by holding a gun to ... er ... releasing a "cost projection" report about the effects of health care reform. I'm sure you won't be surprised to hear that it says they will raise premiums sky high if reforms are passed.

Frankly, I wouldn't expect any less of them. They will raise premiums sky high even if reforms don't pass. They always have before. Indeed, the only thing that kept them in check at all over the past 20 years was a roaring stock market, which allowed them to make huge profits while only gouging their customers at about 15% inflation. Lately, they've had no choice but to jack that up and gouge the sick customers even more. They are, after all, profit driven corporations .

This report today, however, signals that the industry is ready to go to war to stop health care reform. Ezra characterizes it properly:
In the hallowed tradition of the tobacco and energy industries, the health insurance industry has commissioned a report (pdf) projecting doom and despair for those who seek to reform its business practices. The report was farmed out to the consultancy PricewaterhouseCoopers, which has something of a history with this sort of thing: In the early-'90s, the tobacco industry commissioned PWC to estimate the economic devastation that would result from a tax on tobacco. The report was later analyzed

by the Arthur Andersen Economic Consulting group, which concluded that "the cumulative effect of PW’s methods … is to produce patently unreliable results." It's perhaps no surprise that the patently unreliable results were all in the tobacco industry's favor. He who pays the piper names the tune, and all that.

All that makes it a bit hard to respond to this analysis. Seriously engaging with its methodology probably gives it more credit than it deserves, making this seem like an argument between two opposing sides as opposed to a predictable industry hit job. But totally ignoring its claims means some of them might live unchallenged. So rather than a full tour through the "analysis," here are a couple of its more representative moments.

Read on.

So why now? Well, this may be a clue:

The U.S. Senate Finance Committee has voted to add an amendment to its version of health care reform legislation that would halve the amount health insurance providers can claim in business tax deductions for executives' salaries, from $1 million annually to $500,000.

The amendment, sponsored by Sen. Blanche Lincoln, D-Ark., was approved by a vote of 14-8 on Thursday, as the Finance Committee wrapped up weeks of work hammering out its take...

Nobody puts CEOs in the corner. Since Lincoln is a joint subsidiary of Walmart and Blue Cross, you can imagine that she's getting the message loud and clear.

The report only shows the rise in premiums and doesn't include the subsidies. But it still means that premiums will be higher than anticipated under reforms --- and much more costly to the government, which is the point of releasing this report, after all. They are playing to the deficit scolds in a last ditch attempt to keep them from getting to 60 votes in the senate and preventing an up or down vote, which they will lose.

There has never been a better argument for the public plan than the one the insurance company just handed the Democrats in congress. They have produced a shoddy, self-serving report as a blatant threat to raise premiums higher than they already plan to raise them. If there has ever been a more obvious case of bad faith than this, I haven't seen it. The only thing that will keep these corporate criminals in line is either price controls or stiff competition and if they can't keep their companies solvent without giving their executives outrageous pay packages, charging ridiculous prices while denying care to sick people, then maybe their financial model just doesn't work.

If these insurance companies can't see the gift horse they've been given with this Rube Goldberg mess that's been created then they are too incompetent to stay in business.

Oh, an by the way, since when does a leading paper run a front page story with blaring headlines featuring a bogus report commissioned by the industry that's featured in the report? Did they discuss this at a bought and paid for "salon" or did they promise to just buy a full page ad next time?

Update: Reader sleon makes a good point:

... the real intention is to give Baucus and his fellow shills cover to get his version of the bill passed. By seeming to attack the very plan they literally wrote themselves with a bogus last-minute scare report, they're simply trying to give him some distance from those (correctly) calling him a wholly-owned corporate subsidiary. It's an obvious straw man outlier, but expect to see lots of press about how this proves Baucus's give away to the industry is actually a brave reclamation of the bi-partisan center.
If that's true, look for the GOP elders to come out against the report.