Is PricewaterhouseCoopers Backpedaling From Its Own Insurance Industry Report?
Is PricewaterhouseCoopers Backpedaling From Its Own Insurance Industry Report?
Over the weekend, America’s Health Insurance Plans (AHIP)– the lobbying arm of the health insurance industry — issued an inflammatory report warning Congress that the Baucus health care bill would increase health care costs. But critics have argued that the report is a skewed analysis that doesn’t consider the totality of reform.
As the Senate Finance Committee points out, the industry backed analysis “has not taken many of the reform provisions into consideration in reaching its numbers.” “These other reform provisions would have the opposite effect and lead to lower premiums – but those provisions were ignored,” the Committee wrote in a memo criticizing the report.
The text of the actual report legitimizes this criticism. From page 8:
The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.
Last night, PricewaterhouseCoopers — the firm hired to perform the analysis — issued a statement reiterating the report’s limitations. PricewaterhouseCoopers reprinted the report’s page 8 language, leading POLITICO’s Chris Frates to interpret the statement as “Hey, we weren’t paid to evaluate the effects of the entire bill, but rather a small slice of it.”
Indeed, a more comprehensive analysis performed by MIT economist Jonathan Gruber modeled on available data from the Congressional Budget Office concludes that if one considers “delivery system reforms, new options, premium assistance, and other proposals to improve quality,” the Senate Finance bill does lower costs:
- Sizeable premium savings for young. An individual aged 25 at $19,000 in income (175% of poverty) would benefit from tax credits and would save, on average, $685. A higher income young person could always buy a “bronze” plan without tax credits for a savings of $230.
- Even larger premium savings for older individuals. A person age 60 with income at $19,000 (175% of poverty) would save, on average, $7890. A person at age 60 with income at $40,600 (375% of poverty) would continue to benefit from tax credits and would save, on average, $4100.
- Also large premium savings for a family. A family with income at $38,000 (175% of poverty) would save, on average, $8550. That same family with higher income could buy a “bronze” plan without tax credits at a savings of $2430 over current non-group prices.
As Gruber explained during an appearance on MSNBC, “I think the point that the premiums will go up, if penalties aren’t higher is exactly right. But that’s not what this report says”:
If the report had came out and said, ‘look we need stronger penalties, or premiums will go up,’ that’s a very valid point to make. But what the report says, is that it went too far. It said with the current structure, premiums will be much higher than they are today. And that’s just wrong. I mean, the non-partisan Congressional Budget Office has came out and said that for this bill, premiums in the exchange will be lower than they are in the none group market today. So they just drew the wrong comparison.
Read Gruber’s full report here.
6 Responses to “Is PricewaterhouseCoopers Backpedaling From Its Own Insurance Industry Report?”
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Should be Backpedalling.
I find it interesting that Price Waterhouse has found it necessary to explain they were hired to evaluate only a carefully selected subset of the bill. Could they sense damage to their reputation? One can hope!
October 13th, 2009 at 12:01 pmInteresting, since I just watched Douglas Elmendorf, the CBO Director testify to the Senate Finance Committee that they would need quite a bit of time to study the PwC analysis before the CBO could either agree with it or contest it…
October 13th, 2009 at 1:59 pmSad that such a prestigious firm would rent out it’s reputation to create by its own admission a skewed report. As a lamp post is to a drunk, more for support than illumination, so AHIP will garner credibility more from Price Waterhouse Coopers name than the content of the report.
October 13th, 2009 at 5:40 pmThe MIT economist, Jonathan Gruber said, “that for this bill, premiums in the exchange will be lower than they are in the none group market today”; “holding that PwC just drew the wrong comparisons.” I agree that the comparisons were skewed, because they compared apples and oranges not, apples and apples. Would the premiums be the same for the same coverage based upon policy choices today, or would the premiums be higher under the government proposal?
October 14th, 2009 at 10:39 pmWill people realize that Gruber is NOT independent but instead basically a White House academic consultant for Health Reform? Or do you believe he is actually independent?
October 15th, 2009 at 5:51 pmDonO: Where in the above report was it written “a carefully selected subset of the bill?” No where, and that is NOT what Pwc said. The bill makes claims of economic growth that many economists say cannot be proven, some even say then can not be believed. The “savings” the fed bills claim are mostly derived by pushing costs onto state budgets by making states increase the number on medicaid.
October 19th, 2009 at 1:27 pmDon’t be fool, there is no such thing as a free lunch. You cannot increase services and reduce costs — that’s a classic oxymoron.
Also ask yourself if D.C. says they can stop the fraud in Medicare why have they NOT stopped it yet? The “savings” they claim to receive by reduced Medicare fraud are themselves fraudulent — corruption runs rampant in government.