AHIP’s Karen Ignagni would reduce benefits further

by Don McCanne, M.D.

One of the more important goals of health care reform was to require plans to provide comprehensive benefits. Although, as with other compromises in the Affordable Care Act (ACA), the legislation fell short, at least they did require that ten categories of benefits be covered, even if insurers were allowed considerable flexibility within each of the ten categories. Now AHIP - the insurers’ lobby organization - is attempting to dismantle the benefit requirement.

Specifically, Karen Ignagni, AHIP’s president and CEO, on C-SPAN’s Newsmakers program said that the ten categories of essential health benefits mandated by the Affordable Care Act were “a giant step up” or “a bridge too far for some individuals.” She said that she “would create a lower tier” - below bronze, silver, gold and platinum. Would that be the “lead” tier? (Some insurers have joined with a couple of members of Congress in proposing a lower “copper” tier which differs in that, rather than reducing the categories of benefits covered, it would reduce the actuarial value to 50 percent  - patients would have to pay an average of one-half of their health care costs.)

Which of the ten categories would she eliminate? Maternity and newborn care? Mental health and substance abuse services? Rehabilitative services? Chronic disease management? Pediatric services? (i.e., five of the ten categories). Undoubtedly a great number of individuals would prefer to pay a much lower premium while forgoing these benefits, especially if these categories did not pertain to them.

Creating another tier below the lowest current metal level meets the desires of insurers who want to expand their markets by offering really cheap plans that exclude major benefits, but it does so at a cost of breaking up the risk pools such that people with expected higher costs would be concentrated in comprehensive plans, driving premiums up to ever less affordable levels – the death spiral of insurance premiums.

When you consider that males would not want obstetrical care, that adults would not want pediatric care, or that healthy people would not want chronic disease care (and could change during the next enrollment period if chronic problems develop), then it is easy to imagine that maybe half of the applicants would choose a lead plan if the premiums were perhaps 30 percent lower than the bronze plans. The other half selecting higher tier plans would have to pay more to cover the savings for those with lead plans. But the four higher tier plans are already so expensive that about 24 million people will qualify for a hardship exemption, allowing them to remain uninsured without having to pay a penalty. Increasing the premiums further will drive more people into the lead plans or perhaps clear out of the market, concentrating higher costs patients in the precious metal tiers, precipitating the death spiral of ever higher premiums.

The insurance industry, in collusion with our politicians, has manipulated the goals of health care reform. Look at what they have done:

* We wanted to include everyone, yet 31 million people will be left out.

* We wanted to reduce financial barriers to care, yet the insurers reduced the actuarial value of their plans by increasing financial barriers to care in the form of higher deductibles and other cost sharing.

* We wanted to slow total spending to sustainable levels. If that is successful under ACA, it will be accomplished primarily by preventing access to essential health care through limited networks and excessive cost sharing, not through true efficiencies such as are found in single payer systems. Preventing people from getting the health care they need should never be a reform goal.

* We wanted to improve quality, yet instead the insurers sell us more worthless administrative services to play ACO and P4P games.

* We wanted to reduce administrative waste, yet instead we add greater administrative complexity through the establishment of insurance exchanges and accountable care organizations.

* We wanted everyone to have comprehensive benefits, but now the insurers want to strip out benefits for the healthy to give them more “choice” in health plans, while passing more costs on to those with greater needs through higher insurance premiums.

Single payer would have achieved the goals we wanted, but the insurers keep chiseling away at them to meet their own business needs while sacrificing health care for the people. Since we can’t seem to fix the insurers, let’s get rid of them.

Suggested Reading: 

C-SPAN, Newsmakers, March 21, 2014


Radnofsky, Louise,  “Health-Law Backers Push Skimpier 'Copper' Insurance Policies,” Wall Street Journal, February 13, 2014


One-liner:  America’s Health Insurance Plans (AHIP), the insurers’ lobby organization, is now attempting to dismantle the ACA’s benefit requirements.

Abstract: The private health insurance industry, in collusion with our politicians, has manipulated the goals of health care reform. It is leaving 31 million Americans uninsured, and many millions are underinsured with plans of low actuarial value, high co-payments and deductibles for limited benefits. Financial barriers to health care have increased, together with costly and wasteful administrative complexity. 

Key words: ACA, access to care, Affordable Care Act, Affordable Health Care, cost containment, Don McCanne M.D., Health Care Disconnects, Health Care Refor,m Health Insurance, Medicaid, Medicare, Obamacare Primary care, single-payer