But this latest proposal was different. It didn’t come from just any do-gooder think tank: it was the brainchild of the Health Insurance Association of America, an organization that until now had all but blocked reform. The HIAA announced that its members-including most of the country’s major health insurers-now favor universal health coverage, stringent cost controls and fewer tax breaks for coverage. Except for the tax issue, the points sound a lot like Clinton’s plans for “managed competition,” which had been anathema to private insurers. It means that health-insurance reform is likelier than ever to pass. It also means that insurers are trying to set the tone of reform-and perhaps keep Clinton from going even farther than his campaign pledges. “The insurance industry is prepared to be flexible and wants to be an active player in the discussion of reform,” said Ian M. Rolland, HIAA board chairman and president of Lincoln National Life Insurance Co. Adds HIAA president Carl Schramm: “We have been the most powerful force in stopping the discussion, and we’ve changed.”
That’s quite a switch, but it’s easy to see why the insurers took the step. James Buckley, an employee-benefits expert at KPMG Peat Marwick, calls the move “enlightened self-interest.” Schramm says that the proposal had been under consideration for nearly a year and the group wanted “to ensure our place at the table.” It seems to have worked. Clinton communications director George Stephanopoulos called the report “a real breakthrough” and said, “We want to work with them.” The insurers already have a lot of common ground with the Clinton team-neither side has committed to specifics. Still, these are what the HIAA calls “the cornerstones” of its plan:
Private insurers could no longer block sick people and those with pre-existing conditions like cancer from getting coverage. Coverage would also be portable-you couldn’t lose it by changing jobs.
The basics would include primary and preventive care as well as catastrophic coverage.
Rules would discourage unnecessary testing and wasteful procedures and limit “cost shifting” by health-care providers, which commonly charge privately insured patients more to make up for lower reimbursement under Medicare and Medicaid.
Employees wouldn’t be taxed on the premiums for essential benefits that their employer buys for them-just like today. But if their company pays for more benefits, they would pay taxes on the additional amount. If the basics cost, say, $3,000, but a company has been paying $4,000 per worker for a richer package, the employee will have to pay taxes on the extra $1,000. Revenues from this change would help pay to cover the poor.
Not everyone was thrilled with the proposal-especially the hospitals, which bear much of the brunt of cost-containment measures. Mike Bromberg, executive director of the Federation of American Health Systems, said, “It is an easy win-win scenario for them to ask government to guarantee that everyone has insurance and at the same time limit what is paid out.” And predictably, the insurers’ ideas don’t go nearly as far as many reformers would like. Robert Hunter, director of the National Insurance Consumer Organization and a prominent industry critic, says that “they help frame the bottom of the debate.” Hunter thinks insurers should be prohibited from charging the sick more than the well-a change that would turn companies into processors for a national health-care system.
Some changes are already on their way: a recent study by KPMG Peat Marwick showed that more than 50 percent of employees at mid- to large-size firms are already in managed health-care plans. The move to managed competition is “an evolutionary development, not a revolutionary development,” says consultant Buckley. Insurers, by opting to evolve, might well avoid their own extinction.
