Perrspectives - Bringing light to Darkness

Obama versus the Animal House Health Insurers

November 14, 2013

In the 1978 classic Animal House, Kent Dorfman (Flounder) is distraught after seeing the damage his frat brothers had done to his brother's brand new Lincoln Continental. In response, Eric Stratton (Otter) famously tells him, "You f**ked up. You trusted us."
That scene came to mind as President Obama announced his "fix" to the policy cancellations America's health insurers sent to hundreds of thousands of people across the nation. From the beginning, Obama trusted his shiny new health reform program to insurers with a proven track record of denying coverage to millions and using schemes like "rescission" and "purging" to drop hundreds of thousands more policyholders when they got sick. Now, despite the promise of 7 million new paying customers in 2014, some insurers are dropping policyholders, refusing to compete in the health care exchanges and narrowing provider networks, President Obama has little choice but to turn to them once again for help.

Given the assurances of the industry back in March 2009, Obama's course seemed like a reasonable one. At his March 5, 2009 White House Forum on Health Care Reform, it was Karen Ignani, the president and CEO of America's Health Insurance Plans (AHIP), who promised the President and the American people:

"We want to work with you, we want to work with the members of Congress on a bipartisan basis here. You have our commitment. We hear the American people about what's not working. We've taken that very seriously. You have our commitment to play, to contribute, and to help pass health care reform this year."

Of course, AHIP's deeds did not match its words. As I noted last week:

That was just a façade to cover an all-out blitz to ensure health care reform was dead on arrival. Behind the scenes Ignani took out the long knives to smother the ACA in its cradle and stab Obama in the back. That summer, the insurance industry spent $173 million and deployed 50,000 workers to kill the public option and other provisions designed to make coverage more affordable. By the time the ACA was signed into law in March 2010, AHIP alone had quietly poured over $100 million into the U.S. Chamber of Commerce campaign to defeat it. But still, they lost.
Now with Obamacare the law of the land, America's health insurance companies are once again doing what they do best: maximizing profits by dropping their sickest and costliest customers while selling products designed not to be used.

Nevertheless, with the web site fiasco and the outcry over those cancellation letters amplified by the GOP and conservative media, the Obama administration is at the mercy of insurers for help with the enrollment process. As The Hill reported on November 5, "White House sends SOS to insurers." Two days later in Politico, Carrie Budoff Brown explained "Why President Obama isn't hitting the insurance companies." She wrote that "his restrained response over the past week shows just how much the dynamic between Obama and the insurance companies has shifted since the law passed -- and how their fates have become intertwined." By November 9, the Washington Post announced:

The White House is increasing its reliance on insurers by accepting their technical help in efforts to repair the problem-ridden online health insurance marketplace and prioritizing consumers' ability to buy plans directly from the carriers.

With his announcement Thursday, President Obama is putting the onus on insurers to decide whether they will allow their subscribers to keep their current, ACA non-compliant policies for one more years. As Sarah Kliff reported, in the industry is furious about the change, one which is both difficult to implement and could make them look like the bad guys for either saying no to current customers or raising premiums for new ones:

"What we want to do is to be able to say to these folks, you know what, the Affordable Care Act is not going to be the reason why insurers have to cancel your plan," he said. "Now, what folks may find is the insurance companies may still come back and say, we want to charge you 20 percent more than we did last year, or we're not going to cover prescription drugs now."
Health insurance plans are angry because this could screw up all their plans for the new health insurance markets. They have already set the prices they plan to charge in the 2014 insurance exchanges, and those relied on people transitioning out of their current plans (which would be phased out) and into these new, more robust plans.

In her statement, AHIP's Karen Ignani made the same point. But despite ample evidence that some of her organization's members are deceiving consumers and boosting profits by shedding more costly customers, Ignani protested:

The only reason consumers are getting notices about their current coverage changing is because the ACA requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today.

It's not hard to imagine President Obama thinking, "That's easy for you to say. What am I going to tell the American people?" It's easier still to think of Otter Ignani responding, "We'll say we were doing a great job taking care of their health insurance policies, but you launched the Obamacare enrollment last month... and it was gone."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

Follow Us

© 2004 - 
 Perrspectives. All Rights Reserved.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram