Financial Crisis Could Override Promised Reforms to U.S. Health System

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OLDWICK, N.J. — Any major overhaul of the U.S. health system next year are shaky given the $700 billion federal rescue of Wall Street and the troubled economy. Although the industry will forge ahead with its proposals to provide all Americans with access to affordable coverage, many health care observers wonder how much urgency such reforms will be given.

In their latest debate, presidential candidates Democratic Sen. Barack Obama and Republican Sen. John McCain sparred on their vastly different health-reform proposals. But they’re aware the priority for most Americans now is fixing the financial fiasco.

Ben Cutler, chairman and chief executive officer of the Texas-based USHealth Group, said health reform will continue to get a lot of "political rhetoric." Regardless of who wins the election, whether either can spend much time in the next 12 to 24 months on major reform is "problematic, I’d say, at best," he said.

Carl McDonald, an equity analyst with Oppenheimer & Co., wrote in a recent research note "comprehensive health reform is difficult under the best of circumstances, and it will be all but impossible to achieve unless the economic picture improves markedly in the next 12 months. The budget deficit is already large, the country’s housing system is in crisis, and most people today care more about what they pay at the pump than they do about the cost of health care."

But Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, said his group is hopeful the next president and Congress will make health reform a priority and will work with them on the effort. "In times of economic uncertainty, health security becomes even more important," he said. Currently, $50 billion a year is spent to provide health care for uninsured Americans in the most expensive way, "through the doors of the emergency room," Zirkelbach said.

AHIP hasn’t taken a position on either candidate or their proposals, he said. But AHIP has a slew of its own. These include proposals to insure every American; to improve the quality and safety of health care; to fix the individual health insurance market and to slash rising health care costs, he said. It also launched its "Campaign for an American Solution," a national, education initiative in which its hosting roundtable discussions with "average Americans" in several cities, hearing their concerns about how they can’t afford coverage and providing feedback on AHIP’s proposals, Zirkelbach said.

But some wonder if the industry wants to change. Samuel Fleet, president and chief executive officer of AmWins Group Benefits, a wholesale brokerage, said the industry is "very much OK with the current status quo." Of active employees, 80% of the cost of their insurance is privately funded by the industry, while 20% is federally funded, he said. They’re also profitable, Fleet said.

Health insurers have been doing quite well, making big profits even when there are millions of uninsured Americans, echoed Jerry Flanagan, health care policy director at Consumer Watchdog, a Los Angeles-based national, nonprofit consumer advocacy group.

Zirkelbach disagreed with contentions the industry is satisfied with the way things are. "For over two years, we have been very proactive in putting forth health care reform proposals because we recognize that the current health care system is not working for everybody," he said. "Health insurance premiums track directly with underlying health care costs." The group often cites prescription drugs and new medical technologies, among others, as reasons for the costly premiums.

Cutler disagreed too, and noted the industry itself needs improvements. "We recognize as an industry that we’re not nearly as efficient as some of the other industries in America and…shame on us if we don’t address some of those issues around how do we become a more effective administrator of health insurance, health care in America."

As a result of the financial meltdown, there’s bipartisan support for new regulation of Wall Street — and that will spill over into the health insurance industry, Flanagan predicted. The industry would rather have no changes than have new regulations over the cost and quality of health insurance, he contended.

Nationally, there are several health insurers that control the market without any oversight of what they charge for premiums, Flanagan said. The industry wants reform, but "on their own terms," he said. Many like the "individual mandate" that requires people to buy coverage, but allows them to set the price, "policing themselves," he said. But now, they are worried about pushing that kind of proposal, Flanagan contended.

"If anything is going to be coming out of Congress next year, it’s going to be regulation," he said.

The economic crisis compounds the problem of rising health care costs on consumers and employers, AHIP’s Zirkelbach said. "As a nation, we need to come together and address the key cost drivers that are causing health care costs to increase."

Contact the author, Fran Matso Lysiak, senior associate editor, at: [email protected]

Consumer Watchdog
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