Insurance exec: Congress must rein in healthcare costs

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The chief representative of the nation’s health insurance industry says there is still a strong possibility that Congress will pass healthcare reform this year. But she says it will take longer than the White House is predicting and will require a more detailed discussion of costs by Congress.

Karen Ignagni, president and chief executive officer of America’s Health Insurance Plans (AHIP), had earlier argued that August “would be a make or break month for health reform.” But now she feels August was “a lost opportunity” to build public support for healthcare reform, she said at a Monitor-sponsored breakfast.

The healthcare town halls were hijacked by the issue of a government-run health-insurance plan – the so-called public option. “August should not have been a month about division, rhetorical division.”

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Healthcare reform by Christmas

Ms. Ignagni does not see the setback as fatal to healthcare reform legislation, however.

“I have always thought that this was perhaps an issue that was going to be resolved in December, not in October,” she said.

For its part, the White House continues to be more optimistic. Earlier this week, Office of Management and Budget Director Peter Orszag told Bloomberg News that healthcare legislation could clear Congress over the next six weeks or so “maybe sooner.”

Areas of consensus

There are major areas of bipartisan consensus on what health reform should include, Ignagni said.

“We believe with the president that there is broad consensus on repairing the safety net, insurance market reforms. We have used that 80 percent figure that the president used, as well. We believe that that is correct. Now the focus and the challenge for members of Congress is, in fact, to focus on the 20 percent,” Ignagni said. “And where they are going to need to specifically focus is in the area of cost containment and financing.”

So far, Congress and the public have not taken an in-depth look at the politically painful choices involved in controlling health care costs, she said.

“We have not had a national discussion looking at charges, looking at underlying health care costs,” she said. “The most important thing members of Congress can do and it is not comfortable politically for them to do it … is to begin looking at how are health care costs, underlying costs, moving.”

Higher costs in the US

Ignagni cited a December 2008 study by the McKinsey & Company consulting firm that compared healthcare costs in the US to those elsewhere.

“We are 50 to 60 percent higher on drugs, devices, and professional services. Now, I don’t think anyone in Congress is proposing to shrink that gap to zero, but surely through a 1.5 percent reduction every year – a modest reduction – we can make progress toward beginning to shrink that variation,” she said.

In an interview with The Los Angeles Times earlier this week, Ignagni warned that, “You can’t restrain premiums unless you restrain medical costs.” And she added, “So far, members of Congress have been allergic to that.”

Cheers for bipartisan Baucus

Ignagni praised Senate Finance Committee Chairman Max Baucus (D) of Montana’s efforts to win bipartisan support for healthcare legislation. Some Democrats have criticized Baucus for spending so much time on what appeared to be a largely unsuccessful effort.

But Ignagni said, “to have supervised such a bipartisan-intensive process was a milestone in this debate and it was an essential contribution. Because having Republicans and Democrats sitting at a table working day after day wrestling with issues I think … that will have a positive effect for the rest of the year…. The first step of bridging differences is to have a common understanding of issues.”

AHIP represents 1,300 firms that provide heath, dental, disability, and long term care coverage to 200 million Americans.

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