Congress faces two politically unpalatable options on health care: Higher fines for working-class Americans who don't buy insurance or increases in spending and taxes after insurance providers predicted huge increases in premiums under the main Democratic plan.
A report from America's Health Insurance Plans saying the cost of health coverage would be nearly 20 percent higher under a Senate Finance Committee plan — $1,500 per year for an individual and $4,000 for a family — has shaken things up in advance of a key vote scheduled for Tuesday.
The report blames a "weak coverage requirement” that might encourage younger and healthier individuals to opt to pay a new federal fine for not carrying insurance rather than paying for a more-expensive policy.
Insurers want the legislation to include stiffer fines for those who don't buy insurance. Higher fines would mean more subsidies to help people afford coverage, and that would raise the cost of the $829 billion plan. A more expensive plan means additional taxes and fees or further increasing the federal deficit.
The insurance industry report came as a blow to the White House and congressional Democrats, who had made a deal with industry leaders: New regulation and coverage requirements in exchange for millions of new customers forced into the system under a mandate. But experts say Democrats should have seen it coming, as the mandate was watered down significantly in the Finance Committee even as the regulations on the health care industry were stiffened.
“The health insurance industry made a calculation much earlier in the year that they would basically accept just about any regulation and requirement just as long as they had a guarantee of a captive customer base, which would mean a very strongly enforced individual mandate,” said Thomas Miller, a health care expert with the American Enterprise Institute and a former senior health economist for the Joint Economic Committee.
The spokesman for AHIP, Robert Zirkelbach, said the Democratic plan will also drive up the cost of coverage by slashing Medicare payments, which he said would force medical providers to make up the cost by charging private health insurers more for services. Those costs would be passed on to the insured, he said.
Zirkelbach told The Examiner that insurers want Democrats to consider cuts across the medical industry, not just for seniors.
“If we are going to get cost under control it is essential to look at savings across the health care system,” Zirkelbach said.
The finance committee is likely to approve the bill Tuesday. But the industry report will make it even harder to convince wavering party moderates to get on board when the measure goes to the full Senate.
“Without better subsidies to make health coverage more affordable, it is difficult to have the strong individual mandate that the insurance industry wants as the price for accepting more regulation,” said Jon Oberlander, a health care policy professor at the University of North Carolina at Chapel Hill. “But making coverage more affordable means either adopting stronger cost control or raising more revenues to enhance subsidies, and neither of those are politically easy steps.”