Public Option Divides Obama, Insurance Industry In the health care debate, insurance companies have come under criticism from the Obama administration. The insurance companies say they support changes to health care, though they oppose a so-called public option that would establish government-run insurance to compete with them.
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Public Option Divides Obama, Insurance Industry

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Public Option Divides Obama, Insurance Industry

Public Option Divides Obama, Insurance Industry

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It's MORNING EDITION from NPR News. I'm Steve Inskeep.


And I'm Renee Montagne. Good morning.

This was a week when private insurance companies seemed to move closer to the kind of health care overhaul they want. The insurance companies started this year at the table, as they say, with President Obama. But they put up a fierce fight against the so-called public plan, a government insurance plan, as part of the bill.

INSKEEP: Now there are signs the Obama administration might accept a plan without it. And the administration has turned it's rhetoric against the insurance companies. The private firms deeply involved in this debate include WellPoint, whose CEO is Angela Braly. Her company has 34 million customers.

Do you assume that the public plan - the public option, as the administration calls it - is dead?

Ms. ANGELA BRALY (CEO, WellPoint): You know, we don't now if the public plan is dead or not. We obviously have some thoughts and concerns about the public plan. Because we know now there's a lot of cost shifting that occurs between Medicare and Medicaid paying lower. And, you know, each of us who has employer-provided coverage or provided coverage through the individual market - per family, we're paying about $1,500 in that cost shift. And if the public plan were to come to fruition, we would expect that cost shifting to exacerbate and…

INSKEEP: You're saying that you think that if there were a public insurance plan, they would force down rates that they would pay for medical coverage and hospitals and doctors would just pass on the difference to private insurance plans - your customers, pretty much. Is that what you're saying?

Ms. BRALY: That's right, Steve.

INSKEEP: Although, isn't there some fairness in the administration's contention that your concern is not necessarily cost shifting so much as you don't want the extra competition?

Ms. BRALY: You know, there is competition in the health insurance market. There are over 1,300 health insurance companies competing…

INSKEEP: Whoa, whoa, whoa, whoa. They don't all compete in the same place for the same customers. Aren't there huge swaths of America where there's only a handful of companies to chose from?

Ms. BRALY: We think there's pretty broad competition, particularly among the major national insurance companies. So, you know, really, what's interesting about this debate is it's shifted to this question about insurance companies, when where we started out in the discussion was about health care reform.

INSKEEP: I'd like to play some tape from the president here, speaking on August 15th. And he certainly was talking about companies like yours.

President BARACK OBAMA: In the past few years, premiums have nearly doubled for the average American family. Total out-of-pocket costs have increased by almost 50 percent. That's more than $2,000 per person. And nobody's holding these insurance companies accountable for these practices.

INSKEEP: Angela Braly, is the president right?

Ms. BRALY: You know, President Obama's focused on what I think there's a misconception about health insurance premiums and what is driving the increase in premiums and the coinsurance piece that we're talking about. You know, for every dollar spent on health care in the U.S., less than a penny goes to insurance company profits. To say that the crisis in health care relates to a penny of the health care cost I think is misdirected. And we need to focus again on health care reform.

INSKEEP: Let's sort out that number, if we can. A lot of money is spent in the health care system on Medicare. And so that's nonprofit. There are a lot of nonprofit insurance companies, and they spend money, and so that's nonprofit. So if we actually did your percentage of profits at WellPoint, which is a for-profit company, you're making more than 1 percent profits, aren't you?

Ms. BRALY: Our profit is in the 3-4 percent range - I think this year, around 4 percent. When you look, though, across health care, there are profit margins in a number of sectors around health care that are three, four, five times ours. If you look at biotech margins or pharmaceutical companies or device manufacturers, they're three, four, five, six times the margin in the health insurance business. And the irony of that is it is our job to get to the efficiency of health care.

INSKEEP: There might be another irony there, as well, because if it's your job to make things efficient and the cost of doing business keeps going up year after year after year, doubling in five years, as the president says, somebody might suggest you're not doing a very good job.

Ms. BRALY: We are really making inroads in terms of how this higher quality care that is expensive can be delivered most effectively.

INSKEEP: You certainly are correct when you say that the tone of the debate has shifted, because it appeared in the spring that the health insurance companies were on the same page as the White House, or close to it - or at least talking to the White House. And now there's certainly a different tone, not only in the president's statements, but in some of his supporters or liberal groups. Here's an ad I'd like to play you from a group called Americans United for Change, which supports big changes to health care.

(Soundbite of advertisement)

Unidentified Woman #1: Why do the health insurance companies and Republicans want to kill President Obama's health insurance reform?

Unidentified Woman #2: Because they like things the way they are now. Ed Hanway, CEO of insurance giant Cigna, makes $12.2 million a year.

INSKEEP: That's the ad from Americans United for Change. Is that fair?

Ms. BRALY: You know, I don't think it's fair because, Steve, we came to the table very early on for reform. We offered really meaningful solutions. And so I think that's gotten lost in the debate. I don't think most Americans know that we really came to the table early on as a proponent for some real solutions to health care reform.

INSKEEP: I'm glad you mentioned that. If I'm not mistaken, WellPoint spent about $2.4 million directly lobbying the government last year. Of course, insurance companies and other health industry companies have drastically increased their spending this year. The Blue Cross plans, with which you folks were involved, spent something like $5 million in lobbying the second quarter. I could give a bunch of other numbers, but I'm just curious what you're getting for your money.

Ms. BRALY: What we want to do is be offering good solutions in the debate, which we did really early on. People need to know we're at the table, committed to real reform, sustainable reform that will help us get all Americans covered.

INSKEEP: But I'm wondering what you get for those millions of dollars that you spend lobbying in Washington.

Ms. BRALY: Our commitment is to make sure that we are getting the education and the information around how it really works, giving real-time examples. And I think that's important for all Americans to understand in this debate.

INSKEEP: Now, you have to hire the lobbyists to get the access to make your case to lawmakers.

Ms. BRALY: I think there's lots of folks who are very engaged in the debate, and to be at the table and offer these solutions is really important to us.

INSKEEP: Angela Braly of WellPoint, thanks very much.

Ms. BRALY: Thank you, Steve.

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