Job Shift insurers on premiums

 

Thursday, Mar 26,2009, 1:30:57 PM   Click:

Copyright 2009 Los Angeles TimesAll Rights Reserved Los Angeles Times

25 March 2009 Wednesday Home Edition

SECTION: BUSINESS, Business Desk, Part B, Pg 2

LENGTH: 911 words


TITLE: Insurers offer passage on premiums; A proposal to stop caring for people sick of the coverage is subject to conditions.

Signature: Noam N. and Levey, Lisa Girion

DATELINE: WASHINGTON AND LOS ANGELES



The countries leading health insurers offered Tuesday to end their long practice of charging higher premiums to sick customers, an important concession in the face of growing criticism of the industry in Washington.

The supply of America's Health Insurance Plans and Blue Cross Blue Shield Assn., Whose member companies cover more than 200 million people, comes as lawmakers on Capitol Hill debate a proposal to create a public insurance .

It highlights the pressure the industry is facing Congress and the administration of policy Obama moving ahead with plans to reshape the nation's health system.

The industry underwriting policies are widely criticized for driving millions of people into the ranks of the insurance.

The number of uninsured people in the United States grew by nearly 9 million since 1994, reaching 45.7 million, according to a study released Tuesday by the Robert Wood Johnson Foundation. The study also revealed that nearly 1 in 5 adults is uninsured.

Tuesday, Karen Ignagni, who heads America's Health Insurance Plans, said insurers want to help reverse that trend. "The private sector can meet the challenge of solving these problems," she says.

Ignagni and Blue Cross Blue Shield Assn. Scott P. Serota President made the offer in a letter to senior senators. But he came with a catch: Insurers have said that all Americans must buy health insurance to increase the size of the pool of risk, a concept opposed by many consumer groups.

"By adopting an effective, enforceable requirement that all Americans are responsible for obtaining and maintaining health insurance, we believe that we could guarantee issue coverage without preexisting condition exclusions and phase of the practice of various bonuses based on health status in different markets, "they wrote.

The two industry leaders said insurance rates will still vary by age, family size and geography.

And they asked permission to offer discounts for people who engage in health behaviors such as smoking and adherence to treatment programs for chronic diseases.

CRT Capital Group analyst Sheryl Skolnick, who follows the insurance industry, said the offer to waive premiums underwritten medically May be a recognition by insurers of the need to "do what it takes" to get people in the insurance market.

"I'm sure what they want to be seen as an important step in promoting reform," said Skolnick. "I just want to know what the catch is."

She said that the insurers have decided that they had more to gain by abandoning variable pricing by the struggle to maintain.

Ignagni would not say Tuesday whether the revenue lost through the Equalization of premiums between the sick and healthy customers could be recovered by insurers in a market in which all Americans to buy insurance.

Is also unclear whether insurers proposal will lead to demand for public insurance.

After years of horror stories of Americans denied coverage, many congressional Democrats have pledged not only to strengthen the regulation of the insurance market, but also to create a so-called public for reduce the number of uninsured.

This plan, which the liberals and special interest groups say is necessary would be in direct competition with private insurers.

Industry representatives vehemently oppose it, saying it would hard to insurers of the company and lead to the creation of a single payer system similar to those in Canada and Britain .

Ignagni Serota and reiterated their opposition Tuesday in the letter.

"Creating a new government-run plan counteract the ability of the health sector to implement reforms in the delivery system, exacerbating the cost of transfer of public programs for consumers in the private market and destabilize the system based on the employer, "they wrote.

But industry leaders, who 15 years ago have been blamed for scuttling President Clinton, the campaign for health reform are also careful not to seem too recalcitrant.

Late last year, America's Health Insurance Plans said insurers not to reject people with pre-existing, if policymakers in Washington has created a mandate requiring all Americans to get insurance.

And Tuesday, Ignagni reiterated the industry's commitment to remain at the negotiating table.

She said her group had submitted a proposal in a month to resolve the problems that many small businesses face when an employee is sick, hence the dramatic increase in premiums for the company.

"We worked with a number of small businesses and small businesses themselves," said Ignagni.

The industry groups' letter was received with a slight praise by several lawmakers Tuesday.

But an aide to the chairman of the Finance Committee of the Senate Max Baucus (D-Mont.), a leader in the effort on Capitol Hill to revise the health system, said it would not leave the creation of a new government insurance program.

The White House refused to comment on the offer. A spokesman for the Iowa Senator Charles E. Grassley, senior Republican on the Finance Committee of the Senate, dismissed the letter simply reiterating the position of the industry.

Richard Kirsch, who now heads the health care for Americans, a major consumer group in Washington that the letter blasted cynical ploy.

"It is a sign of desperation," said Kirsch. "They are always looking to learn how they can charge us as much as they want and have no competition for a government."

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noam.levey @ latimes.com

lisa.girion @ latimes.com

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