McCarran-Shield The insurance industry shot itself in the foot once again with the clumsy release of a study claiming that the Senate Finance Committee's health care reform bill will end up raising premiums for all. While many of the points made in the survey are sound, its poor delivery has galvanized the industry's critics into a lynch mob.

The study, done on behalf of America's Health Insurance Plans (http://bit.ly/1PKPHL), has blown up in the industry's face. The backfire might leave health insurers worse off than they were prior to the report's release, providing ammunition to those who insist a public option is the only way to truly reform this shell game of an insurance system.

The study exposed some critical weaknesses in the Finance Committee's bill, such as a penalty for remaining uninsured that's too soft to compel most people to buy coverage, as well as fees on insurers and high-level benefit plans that will likely be passed on to consumers--commercial and individual.

But the presentation of the results came across as self-serving and sour grapes, and was introduced into an already toxic atmosphere in which insurers are increasingly being perceived by one and all as the bad guys in the health care reform drama.

As a result, the dead-on-arrival scheme to create a government health plan to "compete" with private carriers is alive and well, and gaining political momentum--although it may be part of a state opt-in program, or even involve some sort of national trigger point that will almost certainly be reached.

In addition, two powerhouse lawmakers--Senate Majority Leader Harry Reid, D-Nev., and Senate Judiciary Chair Patrick Leahy, D-Vt., angered by the report, are now moving aggressively to strip health carriers and medical malpractice insurers of their federal antitrust exemption.

If they succeed, how long do you think it will be before Congress removes that McCarran-Ferguson shield entirely from all carriers?

Insurers never seem to get this part of their business right! Reputational risk management appears to be beyond their abilities. Most times they play rope-a-dope, taking a beating from critics, without ever defending themselves or fighting back. Other times, they line up in a circular firing squad!

There had to be a better way to present this material, and certainly earlier in the political process. But now, they've put themselves behind the eight ball yet again!

Their opponents are having a field day, demonizing the insurance business with impunity.

Paul Krugman's column in today's New York Times, headlined "A Hatchet Job So Bad, It's Good" (http://bit.ly/2Q0bdK), while conceding some of the industry's points, wrote that "the end result of AHIP's blunder may be a better bill than we would otherwise have had." By "better," he means one with a public option.

Then I received an e-mail from the Democratic National Committee today, with the subject line of: "The Insurance Lobby's Lies," blasting the AHIP's report as "full of flawed claims that reform would increase costs."

The Dems added that this is "exactly what we should expect from an industry that's been fighting tooth and nail to kill reform, and is now preparing an all-out assault."

"We're not going to take it sitting down," the e-mail goes on to say." So this week, we're calling out the health insurance lobby...This week, we're not simply debunking lies. The best way to Call 'em Out is to cut through the spin and tell our representatives to say 'no' to deceitful lobbyists and 'yes' to reform."

"This isn't the first time the health insurance lobby has lied, cheated, or used misleading reports," the e-mail charged. "This false report is just the latest salvo in a multi-million dollar offensive that appears designed to frighten voters and bully Congress into opposing reform."

Health insurers were on board early in the reform debate. But lately, it's been circle the wagons time once again.

The industry was able to derail the Clinton health care reform effort with a series of devilishly ingenious and very effective "Harry and Louise" ads. But this time around, Harry and Louise are on the side of the reformers, in ads run this spring by Families USA.

If that doesn't tell you how times have changed, nothing will.

What do you folks make of all this? How might the industry have handled this better? Is there time to make a course correction, of is it too late?

Special Reports /

Insurers Back In A Circular Firing Squad!

Related Stories

Recommended For You