Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


11:59 AM
Connect Directly

Insurance Industry: Healthcare Reform Fails to Address Costs

Health insurance carriers praise coverage, lament cost. Distributor association expresses disappointment on cost to small businesses and procedural liberties taken by Congress to pass the Patient Protection and Affordable Care Act.

Sunday's House vote on the Patient Protection and Affordable Care Act was greeted with concern from insurance industry sources about the proposed legislation's ability to address costs.

Philadelphia-based CIGNA (Philadelphia) acknowledged the "historical significance" of the House vote, emphasizing the importance of expanded access to people who currently lack coverage. However, the company's statement went on to express a "strong belief" that the legislation would not improve quality or address cost increases on the provider side.

"In particular, we must change from pay per service (or quantity) to pay for outcomes and efficiency," the CIGNA statement proceeds. "Without continued participation of all stakeholders to offer constructive solutions, the current proposal will only expand access and further erode affordability and quality of care for all. This is not a sustainable solution to America's rising health care cost problem."

America's Health Insurance Plans (AHIP; Washington, D.C.) issued a brief statement from president and CEO Karen Ignagni saying of the reform bill that "The access expansions are a significant step forward, but this legislation will exacerbate the health care costs crisis facing many working families and small businesses."

AHIP released a longer document over the weekend detailing several aspects of the reform bill that the organization considers problematic, including examples relating to lack of cost containment; the imposition of a new premium tax; counterproductive market reforms that benefit some citizens at the expense of others; and "massive" cuts of over $200 billion to the government's Medicare Advantage program. The document included the following quote from Ignagni:

"For health care reform to work, everyone needs to be covered and the growth in health care costs must be brought under control.' Health care reform legislation that does not address underlying medical costs cannot be sustained.' Unfortunately, this legislation will drive up health care costs by adding billions in new health care taxes and encouraging people to wait until they are sick before getting insurance." The Independent Insurance Agents & Brokers of America (Big "I," Washington, D.C.) was less ambivalent in its response, expressing a statement focusing on its "disappointment" with the passage of the healthcare reform bill.

"The Big 'I' is greatly disappointed that after months of negotiations, hearings, debates and votes in multiple Senate and House committees we seem to be back on square one: a bill that does little to stem the skyrocketing cost of health care and will be financed on the backs of small business during one of the most delicate financial periods in American history," comments Robert Rusbuldt, Big "I" president and CEO. "We are equally disappointed that the Democratic leadership is using a procedural end-around, the reconciliation process, to make such major policy changes to what amounts to nearly 18% of our nation's economy."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

Register for Insurance & Technology Newsletters