Timothy P. Carney: Obama offers the insurers their Holy Grail
By: Timothy P. Carney
Examiner Columnist
September 11, 2009
President Barack Obama held out for more than 20 months, but on Wednesday night, the health insurance companies finally got to him.
"Unless everybody does their part," Obama told the joint session of Congress, "many of the insurance reforms we seek, especially requiring insurance companies to cover preexisting conditions, just can't be achieved. That's why under my plan, individuals will be required to carry basic health insurance."
Obama's choice of words in the House chamber Wednesday night, "unless everybody does their part," echoed his inaugural address, which called for a renewed "spirit of service," and "a new era of responsibility -- a recognition, on the part of every American, that we have duties to ourselves, our nation and the world...."
Who knew Obama was talking about the "duty" to buy and hold health insurance with prescription drug coverage and a sufficiently low deductible? It's the insurers' dream come true.
Go back to last November, in the weeks after Obama's election. America's Health Insurance Plans, the lobbying group for the insurers, made its opening bid on health-care reform: "Health plans today proposed guaranteed coverage for people with pre-existing medical conditions in conjunction with an enforceable individual coverage mandate." The lobby also called for individual subsidies, which it called "premium support for moderate-income individuals"
This was what Obama proposed Wednesday night: an individual mandate (as he put it, "individuals will be required to carry basic health insurance"), subsidies for individual insurance (Obama said, "for those individuals and small businesses who still can't afford the lower-priced insurance available in the exchange, we'll provide tax credits,"), and guaranteed issue ("it will be against the law for insurance companies to deny you coverage because of a preexisting condition").
The insurers' agenda in autumn 2008 has become Obama's agenda in autumn 2009. Barack Obama wants to make it illegal for you not to buy Aetna's or Blue Cross's product.
Obama opposed an individual mandate on the campaign trail -- it was a sticking point between him and Hillary Clinton, who backed it. Obama's campaign spokesman Bill Burton, now a White House spokesman, attacked Hillary's proposed individual mandate this way: "She's said she'd 'go after' people's wages if they couldn't afford health insurance under her plan."
But that is just what Obama's plan amounts to. Obama didn't give specifics Wednesday night, but a mandate needs an enforcement mechanism. The mechanism on the table currently is Sen. Max Baucus's proposal to fine every family without the minimum-required health insurance $3,800.
It's an odd way to "cover everyone." It's like delivering on the old political promise of "a chicken in every pot" by fining everyone who doesn't buy a chicken.
The individual mandate has been the Holy Grail for the insurance companies. What business wouldn't love similar treatment? Maybe Apple can get a provision stating (to use Obama's phrasing) "individuals will be required to carry basic music players." Perhaps Smith & Wesson can get its own individual mandate.
The key for the health insurers, though, is not so much the new clients it will pick up -- the healthy 24-year-old who would rather insure himself with savings than throw the money into premiums -- but the indirect economic effects. If you get fined $3,800 for not buying insurance, the industry -- famously uncompetitive -- never has to charge less than $3,800 a year in premiums. And if you're getting by on a lean, low-premium plan, Obama might force you to buy a bigger plan than you need.
This is why the drug makers love it, too: The government will set minimum standards for the insurance we will all be forced to buy. Pharmaceutical Researchers and Manufacturers of America (PhRMA), whose top lobbyist has been to the Obama White House at least six times this year, will make sure prescription drug coverage is in there.
There are rationales for the individual mandate: it broadens the insurance pool, which is the only way to prevent huge rate hikes once the insurers are forced to cover those with pre-existing conditions. Also, it will prevent uninsured folks from using the emergency room for primary care.
To be fair, Obama pushed proposals the insurers don't like -- namely the government option for insurance -- but he seems to be running from those.
If ObamaCare drives up your premiums through the mandates and grows the deficit through the subsidies, rest assured: You're doing your duty.
Timothy P. Carney is The Washington Examiner's Lobbying Editor, His K Street column appears on Wednesdays.
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