Healthcare Reform Round 2: Obama, Congress, Health Insurers and the Bobo Doll Experiment

Will things be different in Round 2? The updated proposal for healthcare reform released by the Obama White House on Monday, February 22, is being positioned as a revised plan designed to make health insurance coverage more affordable and also bolster federal authority to regulate premium hikes.It also aims to combine much of the already-passed Senate legislation (the Patient Protection and Affordable Care Act) with aspects of the House of Representative proposals. The proposal also comes several days in advance of a bipartisan White House healthcare summit scheduled for later this week.

Both opponents and supporters weighed in quickly with commentary about what the president's proposal would mean. For example, in an official statement issued a few hours after President Obama's proposal came out, Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP), stated: "To suggest that cost containment can be achieved by singling out health plans ignores the very inconvenient truth that premium increases reflect increases in the underlying cost of medical services. Regulating premiums won't do anything to reduce the soaring costs of medical care. This would be like capping the prices auto makers can charge consumers, but letting the steel, rubber and technology manufacturers charge the auto makers whatever they want."

Here are a few highlights of The President's Proposal, taken from the document itself:

"It sets up a new competitive health insurance market giving tens of millions of Americans the exact same insurance choices that members of Congress will have.

"[It improves] insurance protections for consumers and [creates] a new Health Insurance Rate Authority to provide Federal assistance and oversight to States in conducting reviews of unreasonable rate increases and other unfair practices of insurance plans."

"The House and Senate bills require individuals who have affordable options but who choose to remain uninsured to make a payment to offset the cost of care they will inevitably need ... The President's Proposal adopts the Senate approach but lowers the flat dollar assessments, and raises the percent of income assessment that individuals pay if they choose not to become insured."

"The Senate bill includes a $67 billion assessment on health insurers over 10 years to offset some of the cost of enrolling millions of Americans in their plans. The President's Proposal delays the assessment until 2014 to coincide with broader coverage provisions which will substantially expand the market for health insurance providers."

Under the heading, "Policies to Crack Down on Waste, Fraud and Abuse" there are several proposals that undoubtedly will involve insurance company IT resources and management focus, including a "comprehensive Medicare and Medicaid sanctions database, overseen by the HHS Inspector General;" "expanded access to the Healthcare Integrity and Protection Data Bank;" and "use of technology for real-time data review - the President's Proposal ... establishes a system for using technology to provide real-time data analysis of claim and payments under public programs to identify and stop waste, fraud and abuse."

At this point in this long and difficult debate, I'm reminded of the infamous "bobo doll experiment" - a study on aggression overseen by psychologist Albert Bandura in 1961 at Stanford University. The study, which demonstrated that children are able to learn by observing adult behavior, involved researchers who physically and verbally abused an inflatable doll in front of preschool-age children. This led the children to later mimic the adults' behavior by attacking the doll in the same way.

Meanwhile, the bobo doll itself bounces back to take more abuse. In the case of President Obama, Congress, and the health insurance industry, I'm not sure who is the bobo doll, who is the knowing attacker, and who are the children learning by example.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio