Krugman: Insurance Industry Assails Health Care Legislation

Here’s an interesting editorial on the most recent efforts of the Insurance Industry to defeat BARF (Baucus Against a Real Fix bill).

In a blistering new attack, the health insurance industry said Sunday that health care legislation drafted by Senate Democrats would drive up premiums, rather than making coverage more affordable, as the White House contends.

A lobby for the industry, America’s Health Insurance Plans, focused its criticism on a bill likely to be approved Tuesday by the Senate Finance Committee.

“The overall impact will be to increase the cost of private insurance coverage for individuals, families and businesses above what these costs would be in the absence of reform,” said Karen M. Ignagni, president of the trade association.

Democratic aides on the Finance Committee disputed the conclusion. They said the bill would provide tax credits to millions of people to help them afford coverage. Moreover, they said, people could keep the coverage they now have if they wanted. In addition, they said, some provisions of the bill would reduce the administrative costs of insurance.

Ms. Ignagni cited a report done last week for her organization by PricewaterhouseCoopers, the accounting firm.

The report says that the cost of the average family coverage, now $12,300, will rise to $18,400 in 2016 under current law and to $21,300 if the Senate bill is adopted. Likewise, it said, the cost of individual coverage, now $4,600, will average $6,900 in 2016 under current law and $7,900 under the bill.

The study provides ammunition to Republicans attacking the legislation and might intensify the concerns of some Democrats who worry that the bill does not provide enough help to low- and middle-income people to enable them to buy insurance...

Inserted from <NY Times>

Now I can’t speak to the accuracy of the PWC data, and I would be surprised if it is not weighted toward what Big Insurance wants.  However, in essence, they are right about BARF and are using it to try to kill reform.

BARF imposes a fee on all insurance policies worth more than $8,000 per year.  The claim that insurance companies will lower premiums to avoid paying the fee is ludicrous.  With BARF’s mandated coverage and lack of either a strong public option or any controls on premium rates, Big Insurance would be free to reduce benefits and raise prices.  That’s exactly what they will do.  Millions of middle class people have plans that will be charged.  The House versions of health care reform make their versions revenue neutral by taxing  incomes over $250,000 per year.  That’s the way to go here.