A Complicated Enemy: Obama Seeks to Vilify Health Insurers, Give Them $336 Billion Check

Mar 8, 2010 6:20pm

 A Complicated Enemy: Obama Seeks to Vilify Health Insurers, Give Them $336 Billion CheckABC’s Z. Byron Wolf reports: President Obama and Democrats launched a campaign to vilify insurance companies in the final stretch of their health reform effort.

Republicans, meanwhile, pointed out that those very same insurance companies would get huge checks from the government if health reform is enacted.

“(Health Insurers) will keep on doing this for as long as they can get away with it. This is no secret,” the president said. “They're telling their investors this – ‘We are in the money.  We are going to keep on making big profits even though a lot of folks are going to be put under hardship,’” the President told supporters at a stop in Pennsylvania today.

HHS Secretary Kathleen Sebelius, meanwhile, wrote to insurance company executives demanding that they justify premium hikes.

Neither mentioned that the Senate health reform bill, which is the basis for Democrats' last best chance at comprehensive reform, would give the insurance companies millions of new customers required by law to buy health insurance. It would also require insurers to cover everyone, regardless of age, gender or pre-existing condition.

To help pay for the new insurance requirements the government would give to people money to buy insurance – $336 billion over the next ten years. That money, ultimately, would have to go to… drum roll… insurance companies.

People without employer-sponsored insurance who make too much money to qualify for Medicaid and less than about $88,000 for a family of four, would get tax credits to help them buy insurance on the open market. But the payment of the tax credits would be made, point out Republican researchers, directly to insurance companies. See page 37 here of the Senate Finance Committee's exhaustive explanation of the plan: 

During the 2008 Presidential campaign, then-Senator Obama criticized a proposal by Sen. John McCain because it would send government help for people to buy insurance directly to insurance companies.

“But The New Tax Credit [For Health Insurance] He’s Proposing? That Wouldn’t Go To You. It Would Go Directly To Your Insurance Company – Not Your Bank Account," said Obama in October on the Campaign trail.

And yet that’s exactly what Democrats' proposal would do and why so many would prefer public insurance option to compete with the private market. Supporting the Senate bill will be tough for many liberal Democrats in the House.

To the Republicans’ (and Obama’s on the campaign trail) point about the payments going directly to insurance companies, remember that people with employer-sponsored insurance or current federal medical benefits do not usually get a separate check to buy insurance either. They pay premiums directly to the insurance company and so does their employer. The Senate proposal would create a similar relationship between people who don't have employer-based insurance and the government.

So why do Insurance companies, if they're set to receive more than $330 billion in government subsidies to insure people without insurance now oppose the Senate bill?

"Health plans proposed more than a year ago robust insurance market reforms and new consumer protections to guarantee coverage for pre-existing conditions. Much more needs to be done in the current legislation to address the skyrocketing cost of medical care, which is making health care coverage unaffordable for working families and small businesses," said Robert Zirkelbach, a spokesman from America's Health Insurance Plans, in a statement today.

He argued that health insurers should not be targeted by the President and their profits are lower by margin than other sectors in the health industry.

"For every dollar spent on health care in America, less than one penny goes towards health plan profits. The focus needs to be on the other 99 cents," he said.

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