AHIP Tries to Pit Older Americans Against Health Care Reform

President Obama’s first budget to Congress included what his administration has called a “down payment on health care reform.” It is a health care reserve fund of $634 billion dollars over 10 years. The administration proposes funding that reserve with savings from greater efficiencies in Medicare and Medicaid, and changing tax deductions for people who make more than a quarter million dollars a year.

America’s Health Insurance Plans (AHIP), the trade association for the health insurance industry, put out a statement feigning support for change: "Health care reform is our top priority... We will continue to work with other stakeholders to achieve comprehensive health care reform, a goal which has eluded the country for more than a century."

But they are not willing to give up a penny in profits to get that change. AHIP objects to the administration's plan to save money in Medicare by having insurance companies participate in a competitive bidding process if they want to provide benefits to people with Medicare.

President Obama wants to save approximately $175 billion in overpayments to private Medicare plans over 10 years. Under current law Medicare overpays health plans by an average of 14 percent more ($103 per member per month) than it would cost the traditional fee-for-service program to care for the same people.

AHIP’s statement on the President’s budget warns that this proposal “would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system.”

But the money would not be coming from older Americans. It would be coming out of excessive insurance company profits. Their profits have soared since the Medicare Prescription Drug and Modernization Act (MMA) became law in December 2003, because The MMA increased payments to Medicare private health plans. It is not surprising, therefore, to see that the top seven for-profit health insurers had a combined increase in profits of 170.2% between 2003 and 2007.