Both the New York Times and the Wall Street Journal have stories this morning on the exit from the health insurance marketplace of Principal Financial Group, which currently covers about 840,000 lives. All these individuals will have to change their current coverage in the coming months as their policies expire.
More troubling however are the concluding paragraphs of the Times piece, which suggests that Principal’s decision may be one of many made by smaller carriers to exit the health insurance marketplace thanks to the health care law:
More insurers are likely to follow Principal’s lead, especially as they try to meet the new rules that require plans to spend at least 80 cents of every dollar they collect in premiums on the welfare of their customers. Many of the big insurers have been lobbying federal officials to forestall or drastically alter those rules.
“It’s just going to drive the little guys out,” said Robert Laszewski, a health policy consultant in Alexandria, Va. Smaller players like Principal in states like Iowa, Missouri and elsewhere will not be able to compete because they do not have the resources and economies of scale of players like UnitedHealth, which is among the nation’s largest health insurers.
Mr. Laszewski is worried that the ensuing concentration is likely to lead to higher prices because large players will no longer face the competition from the smaller plans. “It’s just the UnitedHealthcare full employment act,” he said.
Democrats claimed that their unpopular health care law would protect Americans from abuses by “Big Insurance.” But if the overhaul leads to industry consolidation – and higher prices as a result – how effective can it be?
RPC Analyst Chris Jacobs
Politico has two articles this morning on the 1099 amendment votes expected today: One outlining the state of play of the Johanns and Nelson amendments, and a second on an Administration letter sent to the Hill yesterday supporting Nelson and opposing Johanns. The letter from Secretaries Sebelius and Geithner opposes the Johanns amendment’s reduction in funding for the Prevention and Public Health Fund, which some have characterized as a source of wasteful federal spending on pork projects like jungle gyms. Perhaps most notably, a Wall Street Journal article quotes a Treasury official as stating the Administration wants to “keep the [1099] proposal…as a means to ensure tax compliance,” while slightly mitigating its impact on small businesses. (The news that the Administration does not want to repeal the 1099 reporting requirement outright may come as a surprise to the 239 House Democrats who voted for a complete repeal of the new requirement back in July.) Meanwhile, small businesses themselves continue to highlight the problems that this onerous new reporting requirement will cause, while advocating for the complete repeal of the 1099 provision: The NFIB sent a key vote letter supporting Johanns and opposing the Nelson side-by-side, while US Chamber of Commerce Executive VP Bruce Josten has a Roll Call op-ed on the issue.
RPC Analyst Chris Jacobs
More news over the past several days about the political headache the unpopular health care law has become for Democrats:
Speaker Pelosi famously claimed that “We have to pass the bill so that you can find out what is in it.” But more than four months after the legislation was enacted into law, the health care overhaul remains as unpopular as ever. When will the majority admit that their government takeover of health care is the furthest thing from the “reform” most Americans wanted?
RPC Analyst Chris Jacobs