Weekly Pulse: Insurance Companies on Charm Offensive

Lindsay E. Beyerstein

Has the health insurance industry seen the writing on the wall -- or will their "cooperation" ultimately undermine Obama's reform program?

This week, the White House teamed up with healthcare
industry giants for a two-day PR blitz on health reform. A coalition of
industry leaders sent a letter to president Obama over the weekend,
pledging to help contain healthcare costs. The signatories include PhRMA (drug makers), Advamed (device manufacturers), the AMA (doctors), the AHA (hospitals), AHIP (health insurance), and SEIU’s Health Care project. The corporate signatories are the very same interest groups that have fought U.S. healthcare reform for generations. AHIP, America’s Health Insurance Plans, helped torpedo the Clinton plan in the 1990s with the infamous “Harry and Louise” TV spots.

Progressive healthcare writers are divided as to whether Obama’s
rapprochement is a good sign. One school of thought is that the
interest groups have finally seen the writing on the wall. Arguably,
the industry realizes that some kind of healthcare
reform is inevitable and they hope to get the best possible deal by
cooperating. Another perspective, not necessarily incompatible with the
first, is that this kind of “cooperation” will ultimately co-opt Obama’s reform program.

Mike Madden summarizes the main thrust of the industry charm offensive in Salon:

Some of the organizations that have
fought hardest against changing the system in the past are — for now,
at least — saying they’ll work for it this time around. To demonstrate
how serious they are, they joined Obama Monday to say they’ll work
voluntarily to cut the growth rate of healthcare
costs by 1.5 percent each year for the next decade. Unchecked, costs
would increase by more than 6 percent a year, so the administration
says the country — private employers and the government combined —
would save $2 trillion from the effort. An average family of four could
save $2,500 a year within five years.

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The letter
itself offers few details as to how the industries will actually go
about saving money. More to the point, there’s nothing forcing these
groups to follow through on anything they’ve pledged to do.

Still, if you parse the platitudes, the industry is diverging
slightly from Republican anti-reform rhetoric. The GOP has been
crusading against comparative effectiveness research (CER) ever since the stimulus bill set aside a billion dollars to fund it. CER
is just research to discover which treatments give the best outcomes
for the money, but the GOP would have us believe that it’s a stalking
horse for rationing. Whereas, the industry coalition’s letter talks
about cutting costs by “aligning quality and efficiency incentives” and
“adherence to evidence-based best practices” – basically, big words for
“studying the evidence” and “trimming the fat” – the core of the CER agenda.

Steve Benen of the Washington Monthly thinks the new conciliatory posture
is encouraging evidence that the Republican opposition to reform is in
such disarray that the industry is prepared to make nice with the Obama

…I’m encouraged anyway, in part because it suggests the right’s opposition is completely falling apart, as the reform push picks up
needed momentum, and in part because it brings these heavy-hitters into
the tent, where they’re far less likely to start launching vicious

Andy Stern, president of the Service Employees International Union (SEIU), also secured a seat at the table. As Ezra Klein suggests in the American Prospect, the fact that Stern is in the room is a testament to his skill as a coalition builder. SEIU represents millions of Americans, including many healthcare
workers. Stern told Klein that the group had set itself a June 1
deadline to put forward concrete proposals that can be assigned dollar
figures. The Finance Committee’s first bill drops in June, so the
committee will have to work fast if they want to see their suggestions

Josh Holland of AlterNet says we should beware of the healthcare execs’ blandishments. Holland notes that they promise to reduce the growth in costs to “only” 4.7% a year:

There’s no news here — “voluntary”
codes  of conduct, self-regulation and industry-driven initiatives for
the private sector to address complex policy issues have long been a
standard tactic for heading off real regulation, real accountability measures, systemic reforms.

In Mother Jones, James Ridgeway agrees that the initiative is a mere publicity stunt, seeing as there’s nothing but the threat of public embarrassment to hold the group to any of its pledges.

“Public embarrassment”? From Big Pharma and the health insurance companies–-two
of the most shameless industries in the history of corporate
capitalism? In any case, even if the $2 trillion reduction is achieved,
it clearly won’t come out of industry profits.

Even if we do get healthcare reform this year, what would the end product look like? In the Nation, Trudy Lieberman, director of the health and medicine reporting program at CUNY, takes a hard look at the messages the president has sent so far. She foresees a package that’s congenial to Obama’s corporate allies:

It’s becoming clearer that reform will include some or all of these options: requiring everyone to carry health insurance (an individual mandate
à la Massachusetts); subsidizing a portion of the 85 percent of the
uninsured who can’t afford to buy a policy; taxing some of the health
benefits workers now get from employers to pay for insurance for the
uninsured; letting people keep the coverage they have even though it’s
likely to cover less as time goes on; shoving more people onto
Medicaid; and trying to get insurers to insure sick people. There may
or may not be a public insurance option–maybe like Medicare, or maybe
not–that would compete with private insurers and theoretically reduce
the cost of insurance.

All this conciliation is not cost-free. In the following video, economist Richard Wolff tells The Real News that Obama risks a grassroots backlash if he caters to corporate interests on healthcare. People want better healthcare,
not just a choice of bad options. If the result of “reform” is an
inferior public plan alongside the private system, employers will have
an incentive to push their workers onto the public plan, and we’ll all
be worse off.

The president may not support a true national healthcare plan, but don’t count the friends of single payer out yet. Doctors and other advocates for single-payer healthcare crashed a Senate Finance Committee meeting this week to protest their exclusion from a series of roundtable discussions on healthcare policy, as Laura Flanders reports on GRITtv.
“Every lobbyist in America is at the table, when are the American
people going to be heard?” shouted one activist. A handful of activists
were arrested when they refused to come to order.

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