The Wonk Room

Obama’s Closing Argument For Reform: Don’t Let Health Insurers Run The Roost

Obama speaking at Arcadia University in Glenside, Pa.

I’m usually not a fan of President Obama’s campaign-like policy rallies, but I think today Obama did a very nice job of laying out the case for why we can’t allow insurers to continue running the roost. I just wish he would have said this sooner:

OBAMA: And the insurance companies continue to ration health care based on who’s sick and who’s healthy; on who can pay and who can’t pay. That’s the status quo in America, and it is a status quo that is unsustainable for this country. We can’t have a system that works better for the insurance companies than it does for the American people. (Applause.) We need to give families and businesses more control over their own health insurance. And that’s why we need to pass health care reform — not next year, not five years from now, not 10 years from now, but now. (Applause.) [...]

Every year, the problem gets worse. Every year, insurance companies deny more people coverage because they’ve got preexisting conditions. Every year, they drop more people’s coverage when they get sick right when they need it most. Every year, they raise premiums higher and higher and higher.

Just last month, Anthem Blue Cross in California tried to jack up rates by nearly 40 percent — 40 percent. Anybody’s paycheck gone up 40 percent?

[Insurers] organized a conference call in which an insurance broker was telling Wall Street investors how he expected things to be playing out over the next several years, and this broker said that insurance companies know they will lose customers if they keep on raising premiums, but because there’s so little competition in the insurance industry, they’re okay with people being priced out of the insurance market because, first of all, a lot of folks are going to be stuck, and even if some people drop out, they’ll still make more money by raising premiums on customers that they keep. [...]

This year, insurance companies will be banned forever from denying coverage to children with preexisting conditions. (Applause.) This year, they will be banned from dropping your coverage when you get sick. (Applause.) And they will no longer be able to arbitrarily and massively hike your premiums .

It’s a combative message that cuts through all of the detailed discussions about specific provisions and process and says something that actually resonates. It also corners the opposition: are your with the insurance companies, or are you on the side of the consumer? Do you want to allow insurers to continue practicing a business model that makes more money by denying care or, do you want to lay down a foundation of reform that encourages providers and payers to deliver (and pay for) care more efficiently?

For too long, the White House has ceded this kind of binary argument to the opposition, which has convinced Americans that the beast you know is better than the one you don’t. Fortunately, now that the administration has decided to move ahead with this frame, it should have no problem demonstrating that without reform, insurers will continue to earn profit by denying coverage. After all, they’ve already admitted it:

- WellPoint CEO Angela Braly: “We will not sacrifice profitability for membership.” [WellPoint Inc. Earnings Conference Call, 4/23/08]

- Aetna CEO Ronald Williams: “We have a clear bias toward profitability over growth.” [Hartford Courant, 7/28/09]

- Humana CEO Michael McCallister: “It is important to note if we have to choose between achieving our membership goals and achieving profitability goals, profits will win every time.” [Q4 2002 Humana Earnings Conference Call, 2/3/03]