Health Care Ruling Is A Mixed Bag For Insurers
LINDA WERTHEIMER, HOST:
This is MORNING EDITION from NPR News. I'm Linda Wertheimer sitting in for Steve Inskeep.
RENEE MONTAGNE, HOST:
And I'm Renee Montagne. The ruling yesterday upholding the president's health care law removes much of the uncertainty for businesses involved in health care. But for the insurance industry the picture is mixed. To find out more about how insurers will be affected, we're joined by Karen Ignani. She's the president and CEO of America's Health Insurance Plans, also known as AHIP. It's the trade association representing the health insurance industry.
KAREN IGNANI: Thank you.
MONTAGNE: Let's begin with the reach of this law. Extending coverage up to 30 million new customers actually sounds like a windfall for the insurance industry. Is it taking it that way?
IGNANI: Well, the most important thing for us with respect to yesterday's decision, there was a great deal of uncertainty about the market reforms that all Americans want and whether they would work. And the most important thing to make market reforms work is to have everyone participate. You need younger and healthier people in the pool. So there's a cloud of uncertainty about whether there would be universal coverage. That was established by the court.
Now the next thing to do is to put the shoulders to the wheel, to look at all of the provisions in terms of will it be affordable, will it be workable. And we're going to be putting our shoulders to the wheel, working with members on both sides of the aisle to deal with some of the affordability issues.
MONTAGNE: Well, of course theoretically this law makes it affordable partly by this mandate or tax on those who don't buy insurance. Do you not expect a lot of - millions and millions of healthy new customers along with less healthy ones?
IGNANI: Well, the question of whether someone actually buys insurance - and it's going to be their discretion - if you're in the individual market, for example, there are 18 million people in the individual market today. That's likely to go to about 25, or higher, million people. The question is whether they will purchase coverage. And the affordability issue is pivotal and key to whether they will. That's why we're very focused on provisions in the bill that may have unintended consequences.
MONTAGNE: Like? For instance?
IGNANI: Let me give you an example. There is - because there was revenue needed to be found to put together the package, the bill, there was a premium tax that was imposed on health insurance coverage. So that's an additional tax.
So if you're a small business person, you're going to pay a three percent additional tax. If you're an individual buying on your own, you're going to pay a little less than that, but it's a tax that you will notice. If you're a state negotiating with the Medicaid plan to get people into managed care, coordinated care, you're going to pay a tax. A number of people aren't aware of that.
So those are the kinds of things, as we approach tax reform in this country, likely next year, we want to make sure that people are aware of so that they can look at this, because any additional costs are going to be material for people making the decision as to whether they're going to purchase or not.
MONTAGNE: Let me ask you. The industry is going to have to cut administrative costs as part of this law. It involves putting all kinds of things on computers and sharing information. How, briefly, will this affect consumers directly? I mean, does that mean there's more money for better care?
IGNANI: The idea of capping administrative costs means that we want to encourage the most effective, efficient care system. And what our plans are doing is making sure that they're responding to the challenge of employers and individuals to get those costs down, to collaborate with clinicians, and to make sure we're managing care in a better way.
And that's what a great deal of what you see in the delivery system today - irrespective of what's going on in Washington and in the states in terms of discussions about the pieces - there's a lot of change in the delivery system for the better in terms of organizing care, which we need to do to make it safer and more effective.
MONTAGNE: We just have a few seconds here. Let me ask you. In a few seconds, where to from here for your trade association and the health industry?
IGNANI: Where to from here is to put our shoulders to the wheel to deal with the affordability issues, and there are many. But there's 18 months between now and January 1, 2014. So we're going to be working with people on both sides of the aisle and working with regulators to flag these issues so there can solutions developed.
MONTAGNE: Thank you very much for joining us.
IGNANI: Thank you.
MONTAGNE: Karen Ignani is president and CEO of AHIP, America's Health Insurance Plans.
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