Today several Democratic Senators said that the AHIP report released on the eve of the critical vote in Senate Finance makes the case for health insurance reform, pointing to the need for the public option and for the insurance market reforms.
We agree—and point to p. 13 of the study by PriceWaterhouseCoopers paid for by AHIP. It shows that the almost all of the alleged increase in premiums would result from the health insurance reforms. Why? Two reasons: first, because insurers would be required to sell insurance to everyone, including people who actually need health care, and second, because insurers would be required to cover most of the cost of care (AHIP uses an average or “actuarial value” of 65%).
In California, more than 2 million individuals buy health insurance as individuals—but we estimate that as many as 400,000 are denied coverage because of medical underwriting. And one individual can pay 15 or 20 times as much for the same health insurance product as someone who is younger and healthier—if the older, less healthy individual can get coverage at all.
Shockingly, in many states, individuals are sold so-called insurance where more than half the premium dollar goes to overhead and profits—and less than half goes to paying for health care. This was the case in California until former Insurance Commissioner John Garamendi pushed through regulations supported by Health Access requiring that health insurance products spend at least 70 cents out of every premium dollar on health care. This eliminated a number of insurance products in the California market of minimal value.
The AHIP study ignores the affordability provisions of Senate Finance proposal: Jon Gruber, MIT, who did the modeling for California health reform, offers an insightful perspective—with the subsidies provided in Senate Finance, almost everyone who gets insurance as an individual would spend less on premiums and get more in terms of health benefits than in the current market.
We still have lots of worries about affordability in the Senate Finance proposal—we have supported HR 3200 in part because HR3200 does a job of assuring affordability and decent benefits. But the bill that was voted out of Senate Finance today is a better bill than what they started with. And there is more to do…