Biden: Health Reform Won't Hurt Insurers

Vice President Joe Biden told a meeting of insurance regulators that health care reform can be accomplished without harming the health insurance industry.

Speaking at the fall meeting of the National Association of Insurance Commissioners, Mr. Biden said that proposals to reform health care delivery will not impact insurer ability to compete and earn a profit. "I want insurance companies to make money," he said. "But I also want them held accountable."

He said the trajectory of expenses must be changed, or else rising costs will cripple businesses and bust the federal budget.

The vice president pointed to health insurance premiums that he said have gone up between 90 percent and 150 percent in the last decade as gaps between premium increases and wage growth is expanding.

In Florida, for example, he said, health insurance rates have increased 121 percent while wages have risen 43 percent. Michigan, the state with the smallest difference, still has a 37 percent gap between premium and wage increases, according to the vice president.

This past year, he explained, premiums have increased 5.5 percent even with overall consumer prices falling 7 percent.

The current health care system, added Mr. Biden, is affecting America's ability to compete internationally. "This is simply an unsustainable position," he said.

The vice president said he would like to see certain "basic ground rules" established under any health care reform legislation (see accompanying graphic). He said these ground rules will not affect the ability of insurance companies to compete, since the same restrictions would apply to everyone.

Indeed, under the current system, he said, insurers cannot "do the right thing" because they will be at a competitive disadvantage.

Individual reform ideas can be debated, Mr. Biden said, but if nothing is done, "in 10 years, one in every five dollars Americans earn will be spent on health care." That number will soar in 30 years to one in every three dollars, he added.

"Spending by the federal government on Medicare and Medicaid alone will be 15 percent of GDP by 2040. It's now around 5 percent," Mr. Biden said.

The vice president praised insurance commissioners for understanding the need for reform, for speaking out in favor of it, and for dealing firsthand with consumer complaints about the current system.

Responding to Vice President Biden's speech, Connecticut Insurance Commissioner Tom Sullivan said he agreed the U.S. health care system is on an unsustainable path, but he expressed dismay at the lack of details provided on how to address rising costs in health care.

"[Vice President Biden] talked about bending the cost curve, but I didn't hear any details on how to bend the cost curve, and I think any elements of reform need to address that with some level of precision and acuity," he said.

He also cited Mr. Biden's comments about Medicare and Medicaid and said costs in these programs must be addressed. "I think we need to deal with the public plan today that's broken with respect to how it's financed," he said.

Financing any reform proposals and dealing with the rising costs of health care are the main concerns with any reform efforts, Commissioner Sullivan said.

The NAIC released principles it supports on health care reform, including:

o Universal coverage.

o Requiring everyone to buy health insurance, just as many states require auto insurance.

o Equal treatment, such as no denials for preexisting conditions.

o Banning the use of health status, gender, or occupation when setting premiums.

o Removing caps on annual or lifetime benefits under a policy.

"We've agreed to a set of principles," said NAIC President and New Hampshire Insurance Commissioner Roger Sevigny, while noting that individual commissioners may support other proposed reforms.

"We have not taken a position on any piece of legislation as a body. We are very much sticking to the principles that we've made public," he said.

Commissioner Sevigny, along with other commissioners, said they expect to have a regulatory role under any reform plan, and that any diminishment of their authority under, for example, a public option, depends on how the plan is structured.

NAIC's president-elect, West Virginia Insurance Commissioner Jane Cline, said state regulators see their role in reform efforts as technical advisors on the impact of different provisions of a given bill. The regulators expressed confidence that some form of health reform will be achieved.