The first time I remember speaking with Karen Ignagni was via a TV satellite, for a debate about health care policy on CNN. It was the summer of 2007, not long after the debut of Michael Moore's Sicko, and each of us was playing our usual role. Ignagni is the telegenic president of America's Health Insurance Plans (AHIP) and arguably Washington's most influential health-industry lobbyist. She was on the show to explain why her members' business practices weren't nearly as awful as the Michael Moore film suggested, and to assure Americans that AHIP would work to make coverage more affordable and accessible. My role, as the author of a new book critical of the insurance industry, was to remind viewers that Ignagni was full of it—that the insurance industry really did do everything it could to avoid covering sick people and to thwart efforts at reform. This was, after all, the same industry that gave us all "Harry and Louise." The discussion got a bit heated, as these things go; I basically accused Ignagni of lying when she said she wanted everybody to have access to insurance; and, by the end, Ignagni was (according to the cameraman) complaining that I'd landed a few low blows.
The second time I spoke with Ignagni was in person, at AHIP's Washington offices, earlier this year. This time, we were sitting just a few feet from each other, at a long conference table overlooking Pennsylvania Avenue. Ignagni appeared exactly as I'd seen her on television—thin with short, lightcolored hair.But this time her own communications people had been reaching out to me; and this time, her statements weren't nearly so predictable. When I asked my first question, Ignagni asked—very politely—if she could put off answering in order to provide me with some important background about AHIP's changing position on health reform. "People sent a strong message to us, that we needed to do more with respect to market rules and performance," Ignagni went on, "that came through loudly and clearly." And she said people were particularly concerned about having to pay disproportionate rates for having pre-existing medical conditions.
I was dubious. Would AHIP and its members give coverage to anybody willing to pay for it? "Yup." Would they provide "community rating," meaning everybody buying the same policy would pay the same price? "Yes." What about letting the government define a basic, minimum benefits package that all policies would have to include? "We're for that." And what about letting the government practice some kind of risk equalization—in effect, taking money away from insurers that cover mostly healthy beneficiaries and giving it to those that attract disproportionate numbers of unhealthy ones? "Yes, the Europeans do this. ... We think it has a great deal of merit."
Of course, her answers left out a lot of key details. She'd let the government define a set of minimum benefits, but would the benefits be sufficiently generous? Community rating usually includes some exceptions for smoking, geography, and sometimes age; what kinds of exceptions would she allow—and how much power to discriminate among customers would she want to preserve? People had told me that Ignagni was a master communicator: When challenged, they said, she deflected so delicately you didn't even notice that she was disagreeing. This turned out to be true. When I asked her about a proposed public insurance plan, into which people could enroll voluntarily, she spent several minutes charitably describing underlying motivations before reaffirming, gently, her opposition.
Still, something had changed. A few years ago, even these hedged policy commitments would have been largely unthinkable. Now, Ignagni and AHIP are doing more than just talking the talk. For the last two years, AHIP has been participating in ongoing, confidential discussions among health care interest groups representing everybody from the medical industry to consumer advocates. Convened in some cases by members of Congress, in other cases by the groups themselves, these discussions have brought together longtime adversaries to find common ground on reform. It was some of these discussions (organized, according to sources, by AHIP and the Service Employees International Union) that led to the meeting of industry groups, including AHIP, at the White House in May—and to the signing of a letter, in which the groups pledged to help the president reduce the cost of medicine.
Earlier this month, New York Times columnist Paul Krugman offered some advice to Democrats: "Don't trust the insurance industry." Like most longtime supporters of health care reform, that has been my position as well. But the things Ignagni is saying publicly—and the things her group is doing privately—are enough to make even this hardened skeptic wonder: Can we trust the insurance industry? Or, at least, can we work with it? To answer "yes" you don't have to believe that the industry has grown a conscience—merely that its self-interest has changed. And there's reason to think that it has.
Like most of the lobbyists playing a key role in the health care debate this year, Ignagni is a veteran of the last serious debate over reform, in 1993 and 1994. But, when that fight began, she was on what most reasonable observers would call "the other side." She had entered the world of advocacy via the Committee for National Health Insurance (established by Walter Reuther in 1969 through the United Auto Workers union) and then the afl-cio, where she worked for over a decade. In those positions, she earned a reputation for protecting labor's interests with ferocity: In the 1992 election, she panned President George H.W. Bush's reform proposal as "incremental"; a year later, she cautioned advisers of President Clinton against timidity. As David Broder and Haynes Johnson recount in their book, The System, at one meeting, Ignagni warned that their reforms did not go far enough, because private insurers would continue "gaming the system."
Ignagni's move to the insurance industry was not, at the time, as drastic as it sounds now. Her first step, in late 1993, was to join the Group Health Association, made up of independent managed-care organizations. Many of them were nonprofit group practices, with deep roots in their communities, that looked favorably upon Clinton's proposals. This was a rather stark contrast to the rest of the industry, which viewed Clintoncare with ambivalence at best, and outright hostility at worst. That was particularly true of the insurance carriers who catered to individuals and small businesses—carriers that tend to make their profits by weeding out sick people. Clinton's plan, like any sensible reform, would have eliminated many of their practices. It was their trade group that conceived of and financed "Harry and Louise."
But, after the Clinton plan died, the interests of the insurance industry began to converge. The trade group representing large commercial insurers merged with Ignagni's, forming the Association of American Health Plans (aahp) and keeping Ignagni as president. Its members soon found themselves the subject of a consumer backlash against managed care—and the object of threats, by feisty Democrats, to regulate the HMOs.
Ignagni would become the industry's most capable defender, making common cause with the Republican congressional leadership. But, unlike Newt Gingrich and his revolutionaries, she didn't focus exclusively on the evils of regulation or the virtues of the market. Instead, she stressed the good things her industry was already doing—and its ability to do even more, all while policing itself. She also appeared to be infinitely reasonable. "If we want to influence the discussion in Congress," she said at one point, "we can't oppose everything." In the end, though, Ignagni's was a tactical retreat, and one that produced total victory. Democrats never did pass managed-care reform, and more than one frustrated reformer came to see Ignagni as a big reason why. Said one congressional Democrat to The New York Times: "Karen went from God's right hand to Satan's left hand."
In the ensuing years, after aahp merged with another trade group to form AHIP, Ignagni would deliver for her industry again—most famously during the Bush-era fight over making prescription drugs more affordable for senior citizens on Medicare. Once again, the insurance industry was in the crosshairs: Many Democrats wanted to provide a drug benefit directly through the government. Working closely with Republican lawmakers, whose campaigns the industry helped finance, AHIP fought the government-run plan and won. The result was a drug benefit that not only operated exclusively through private insurance companies but sweetened the pot with extra subsidies. It's one reason Uwe Reinhardt, an economist at Princeton, recently quipped that "whatever AHIP pays her"—last year, more than $1.5 million in salary and bonuses—"it's not enough."
But times have changed for the insurance industry. The commercial insurers who dominate make most of their money by working with large companies that cover their workers. And that business is slowly falling off, because fewer employers are willing or able to pay the premiums as health care costs skyrocket. Back in the 1990s, insurers could be ambivalent about reform, in part because they felt they had the power to control costs on their own, by turning to managed care. But they've done that now and, after a short respite, costs are going up again. A government intervention—one that restrained cost increases and, no less important, compelled millions to buy private insurance—would provide these insurers with a more predictable and stable stream of business.
Of course, old ideological habits die hard. As recently as the 2008 presidential campaign, AHIP's official reform proposal consisted of modest, incremental steps—stopping well short of the wholesale reorganizations that would make coverage available to everybody. AHIP's solution to the glaring problem of people with pre-existing conditions, who can't buy coverage on their own, was to create special "high-risk" pools, subsidized by the states and run by private carriers. Although these programs have failed in most of the states where they've been tried, AHIP called them "guaranteedaccess plans"—the exact same name John McCain used for a similar feature in his campaign proposal.
But, even before the campaign, Ignagni herself—who, according to sources familiar with AHIP's internal dynamics, commands unusual loyalty among her members—had been laying the groundwork for a more reform-friendly position. After the election, AHIP greeted Obama's victory with a congratulatory note, betraying nary a trace of skepticism: "Now is the time for health care reform. . .. We support coverage for all Americans, coverage they can afford, and coverage they can keep." A few days later, when Senate Finance Committee Chairman Max Baucus released his own framework for reform, the group was similarly effusive. AHIP followed up with a comprehensive reform plan of its own, featuring guaranteed insurance even for people with pre-existing conditions, more government spending on safety-net programs, and an individual mandate—in other words, a plan broadly similar to what leading Democrats were proposing.
Behind the scenes, Ignagni was sending similar signals. A key moment came in February, when Obama was about to release his rough budget outline. Everybody knew Obama would propose reducing the government's payments to private insurers participating in Medicare, then using that money to help pay for universal coverage; everybody knew that the insurers would resist, since the plan would be taking money out of their pockets. But administration officials were in close touch with Ignagni before the release. And, when the proposal came out, AHIP was remarkably sanguine: Its official press release spent two paragraphs praising Obama's interest in reform, before mentioning the proposed cuts. And, while AHIP registered its disapproval, Ignagni herself kept a relatively low profile that day—something that at least some officials in the White House took as a show of good faith, according to an administration official working on health policy.
Ignagni's restraint on the Medicare cuts is consistent with AHIP's push for cost control—positions that have pitted it against other industry trade groups. AHIP has enthusiastically endorsed proposals for "comparative-effectiveness studies"—that is, for creating a quasiindependent government entity that would determine which treatments work best. Most reform-minded politicians and health policy experts believe that such an institution is the best way to reduce health care spending without making it harder for people to get care or diminishing its quality. This position puts AHIP at odds with the drug and device industries, which fear—correctly—that such an institution might cut into their profits. AHIP also supports government-led changes in reimbursement of doctors and hospitals—such as, for example, pegging Medicare payment levels to outcomes—in the hopes of reducing spending further. Not surprisingly, doctors and hospitals frequently take a dimmer view of these proposals.
Those tensions spilled into public view days after the big White House meeting on industry measures to cut costs, which Ignagni attended. The president of the American Hospital Association, reacting to a backlash from his members, hastily let it be known that his group hadn't really agreed to concrete cost reduction targets. Ignagni, conspicuously, stood pat. AHIP's cooperation with reform has also aroused the ire of at least one prominent Republican strategist. In May, Frank Luntz singled out insurers when he briefed congressional Republicans on how to stop Democratic reforms. "For ten years we were carrying the water of the insurance companies because they were backing us on health care," Congressional Quarterly reported Luntz telling members. "Well, they're not anymore. They've sold out."
But AHIP's support for reform has clear limits—most clearly over the prospect of creating a government-run insurance plan, an issue on which AHIP remains in close lockstep with both Republicans and its erstwhile health-industry allies. If the government created such a plan, it could take advantage of lower administrative costs—not to mention government pricing power—to offer lower premiums. It would also, by law, make insurance available to all applicants at the same price. If private insurers couldn't keep pace—if they couldn't realize the same efficiencies or make insurance as widely available—they'd lose business.
Ignagni's response, characteristically, is that a public plan would be redundant—that federal regulation is enough to make affordable coverage available to all. But her definition of regulation is looser than what many reformers have in mind. AHIP has not yet endorsed extending rules about community rating beyond "micro-businesses"—that is, firms with ten or fewer employees. That would leave the rest of the small-business market vulnerable to the same price shocks they get now, anytime one or two employees develops cancer or other serious ailments. And some veteran policy makers worry that even strong regulations won't keep the industry in line. "The insurance industry can live with insurance reform because they will always be able to manage risk by marketing, where they choose to sell, how they arrange benefits, " says one senior House Democratic aide. "They are very afraid of competing against a public plan that doesn't have their same priority—which is to make money for their shareholders. ... They'd rather have new tough rules they know they can circumvent."
Fundamentally, the question of whether to include a public plan as part of health care reform is the same as the question of whether to include the insurance-industry lobby as an ally in the reform movement: Are they trustworthy? And that has inevitably brought me back to the question of whether reformers can trust Ignagni herself. Over the past few weeks, I've asked Washington contacts in the policy world versions of that question—and have received a variety of answers. Ron Pollack, executive director of FamiliesUSA and a longtime advocate for universal coverage, has seen enough of Ignagni publicly and privately to believe that "Karen wants to get a 'yes' on meaningful health care reform." Noting that she, and AHIP, strongly supported expansions of government-provided insurance for children, he says, "for those of us who care about universal coverage, she's been a very strong and effective advocate." Others are more skeptical. "You listen to her talk for awhile, you're not always sure what she's saying—but that's on purpose," said one industry lobbyist who has dealt with her. "She's very articulate and tries to look very accommodating, driving people toward the middle—that's her technique. " Many think Ignagni is simply trying to make the best of a bad situation, securing for her industry a permanent and profitable place in a new health care system while making sure the drive to cut medical costs doesn't target insurers alone—goals that overlap, substantially if not completely, with those of Obama and his allies. "Her first preference would be no reform," says one veteran Democratic strategist. "But this is as close as the Democrats have come to having the votes to do something serious, so she wants to be the proverbial group at the table rather than on the menu." (Disclosure: I first heard this expression while giving a paid speech to an AHIP meeting last fall; I gave most of the money to charity.)
I finally put the question to its foremost authority: Ignagni herself. During a telephone conversation in early June, I sketched out the apparent change in her advocacy work. "I don't get that," she responded, a little edge creeping into her voice. "I don't understand why you'd say that." I explained my thinking—that calling for aggressive government regulation of insurers in the early 1990s, then opposing it in the late 1990s, and then favoring a version of it now meant she was moving from one side of the health debate to the other, and then back again. She begged to disagree: "It certainly wasn't inconsistent." And then, one more time, she told me the story from our first encounter—of how the entire health insurance industry had evolved and how its members sincerely wanted meaningful reform today.
I'm not sure if I believe that. I'm not sure if she believes that. But maybe, in the end, it doesn't matter.
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