Keith Hennessey has taken a closer look at the report, prepared by PriceWaterhouseCoopers for healthcare insurance lobby, that I commented on yesterday. He finds both strengths and weaknesses.
The greatest weakness:
PWC, AHIP, and Ms. Ignani [ed. the head of AHIP] are careful to write that they are studying the effects on insurance premiums of four elements of the Baucus bill, rather than the effects of the entire Baucus bill. This gets watered down or even lost in the press coverage, and I imagine the political discussion will center around “Baucus bill makes health insurance more expensive.†Not coincidentally, AHIP opposes the four elements studied by PWC.
I believe the Baucus bill would make health insurance more expensive, but we can’t tell this from the partial PWC study.
In all likelihood the increase in the demand for healthcare produced by more people have healthcare insurance will itself raise the price of healthcare which in turn will raise the price of healthcare insurance. As Mr. Hennessey points out:
But AHIP likes this factor, so they left it out of the study they requested of PWC.
The greatest strengths:
The Leavitt/Hubbard/Hennessey op-ed warned that insurance “reforms†that would benefit the predictably sick would also raise premiums for younger and healthier workers, and would create an incentive for you to wait to buy insurance until you get sick. PWC believes both these things would happen under the Baucus bill, based on the presumption that the individual mandate is soft and “leaky,†allowing an increasing number of people each year to avoid the mandate.
It’s also solid to assume that taxes on insurers and medical care providers will be passed through to consumers as higher health insurance premiums.
He’s puzzled by the fact of the report and its timing. I think my explanation of that yesterday remains the best. What the health insurance industry believes it was promised and what has materialized in the form of the Baucus plan, some form of which will undoubtedly be enacted into law, are almost certainly very different things. Now the healthcare insurance industry is in something of a panic, trying to exert some damage control.
The AHIP study was pretty sleazy. I am surprised, sort of, that PWC went along.
Steve
For that matter, PWC is actually backing away from their own study. They released a statement which amounted to saying “There’s a whole bunch of factors that may decrease premiums that we didn’t take into account.”