[Marxism] Health Law Turns Obama and Insurers Into Allies

Louis Proyect lnp3 at panix.com
Mon Nov 17 12:48:24 MST 2014


NY Times, Nov. 17 2014
Health Law Turns Obama and Insurers Into Allies
By ROBERT PEAR

WASHINGTON — With the health insurance marketplace now open for a second 
year, President Obama will be depending more than ever on the insurance 
companies that five years ago he accused of padding profits and 
canceling coverage for the sick.

Those same insurers have long viewed government as an unreliable 
business partner that imposed taxes, fees and countless regulations and 
had the power to cut payment rates and cap profit margins.

But since the Affordable Care Act was enacted in 2010, the relationship 
between the Obama administration and insurers has evolved into a 
powerful, mutually beneficial partnership that has been a boon to the 
nation’s largest private health plans and led to a profitable surge in 
their Medicaid enrollment.

Reaching businesses like Bagel Grove in Utica, N.Y., is a priority for 
the new health care law. video Health Care at the Bagel ShopNOV. 4, 2014
The insurers in turn have provided crucial support to Mr. Obama in court 
battles over the health care law, including a case now before the 
Supreme Court challenging the federal subsidies paid to insurance 
companies on behalf of low- and moderate-income consumers. Last fall, a 
unit of one of the nation’s largest insurers, UnitedHealth Group, helped 
the administration repair the HealthCare.gov website after it crashed in 
the opening days of enrollment.

“Insurers and the government have developed a symbiotic relationship, 
nurtured by tens of billions of dollars that flow from the federal 
Treasury to insurers each year,” said Michael F. Cannon, director of 
health policy studies at the libertarian Cato Institute.

The relationship is expected only to deepen as the two sides grow more 
intertwined.

“These companies all look at government programs as growth markets,” 
said Michael J. Tuffin, former executive vice president of America’s 
Health Insurance Plans, the main lobby for the industry. “There will be 
nearly $2 trillion of subsidized coverage through insurance exchanges 
and Medicaid over the next 10 years. These are pragmatic companies. They 
will follow the customer.”

So much money is at stake that insurers may soon be on a collision 
course with the Republican majority in the new Congress. Insurers, often 
aligned with Republicans in the past, have built their business plans 
around the 2010 law and will strenuously resist Republican efforts to 
dismantle it. Since Mr. Obama signed the law in March 2010, share prices 
for four of the major insurance companies — Aetna, Cigna, Humana and 
UnitedHealth — have more than doubled, while the Standard & Poor’s 
500-stock index has increased about 70 percent.

Whatever Republicans do, over the next three months — the enrollment 
period — consumers will hear the same messages from insurance companies 
and the government urging them to sign up for health plans sold on the 
exchanges. Federal law requires most Americans to have coverage, 
insurers provide it, and the government subsidizes it.

“We are in this together,” Kevin J. Counihan, the chief executive of the 
federal insurance marketplace, told insurers at a recent conference in 
Washington. “You have been our partners,” and for that, he said, “we are 
very grateful.”

Despite Mr. Obama’s denunciations of private insurers in 2009, it became 
inevitable that they would have a central role in expanding coverage 
under the Affordable Care Act later that year when Congress ruled out a 
government-run health plan — the “public option” that liberal Democrats 
had favored. But friction between insurers and the Obama administration 
continued into 2013 as the industry bristled at stringent rules imposed 
on carriers in the name of consumer protection.

A turning point in the relationship came last fall, after the chaotic 
debut of HealthCare.gov, when insurers waived enrollment deadlines and 
helped the White House fix the dysfunctional website.

Now insurers say government business is growing much faster than the 
market for commercial employer-sponsored coverage. The Congressional 
Budget Office estimates that 170 million people will have coverage 
through Medicare, Medicaid and the insurance exchanges by 2023, an 
increase of about 50 percent from 2013. By contrast, the number of 
people with employer-based coverage is expected to rise just 2 percent, 
to 159 million.

In addition, the Affordable Care Act has engendered growth in the role 
of private insurers in Medicaid. The law expanded eligibility for 
Medicaid, and most of the new beneficiaries receive care from private 
health plans under contracts awarded by state Medicaid agencies. As a 
result, Medicaid enrollment is up more than eight million, or 15 
percent, in the last year.

In a survey of 10 insurance companies, Joshua R. Raskin, an analyst at 
Barclays, reported that their revenues from the Medicare Advantage 
program were up about 10 percent this year. UnitedHealth Group’s 
Medicaid enrollment surged by nearly one million people, or 24 percent, 
in the last year, said Stephen J. Hemsley, the chief executive. At 
another large insurer, WellPoint, the expansion of Medicaid “is proving 
highly profitable,” Christine Arnold, a managing director of Cowen and 
Company, wrote in a recent report.

WellPoint is a case study in how companies have adapted to the law.

In 2010, as Democrats attacked the insurance industry for what they said 
were its high prices and discriminatory practices, no company was more 
of a target than WellPoint, which had sought rate increases of up to 39 
percent in California. But WellPoint, which operates Blue Cross and Blue 
Shield plans in a number of states, is now prospering.

WellPoint announced recently that it had gained 751,000 subscribers 
through the health insurance exchanges and 699,000 new members through 
Medicaid. Since the end of 2013, WellPoint’s Medicaid enrollment has 
increased by 16 percent, to a total of five million.

“Our government business is growing along multiple fronts” and accounted 
for about 45 percent of the company’s consolidated operating revenues, 
said Joseph R. Swedish, the chief executive of WellPoint.

Aetna, in reporting its third-quarter results, said many people thought 
2014 would “spell the death of our industry.” But, the company said, it 
is having “a very good year,” thanks in part to “excellent performance 
in our government business, which now represents more than 40 percent of 
our health premiums.” The company described Medicaid as a “bright spot 
in the Aetna portfolio.”

Insurers and the administration still have many disagreements, but open 
conflicts are rare.

“With all the politics of the Affordable Care Act, people don’t realize 
how much the industry has benefited, and will continue to benefit, from 
the law,” said Jay Angoff, the Obama administration’s top insurance 
regulator from 2010 through 2012.

One insurer, Humana, derives about 65 percent of its revenue from its 
Medicare Advantage plans. Enrollment in these plans climbed 17.5 
percent, to 2.9 million, in the year that ended Sept. 30, the company said.

At UnitedHealth Group, Medicaid and Medicare Advantage together are 
expected to provide more than $60 billion in revenue, or slightly less 
than half of the company’s total, this year. United expects to 
participate in insurance exchanges in 23 states next year, up from four 
this year.

“The government, as a benefit sponsor, has been increasingly relying on 
private sector programs,” United said in a document filed with the 
Securities and Exchange Commission. “We expect this trend to continue.”

In another sign of the close relationship, the administration has 
recruited experts from the insurance industry to provide operational 
expertise. Eight months after the unit of UnitedHealth Group, called 
Optum, helped repair HealthCare.gov last fall, the administration hired 
a top Optum executive, Andrew M. Slavitt, as the No. 2 official at the 
Centers for Medicare and Medicaid Services. The administration waived 
conflict-of-interest rules so that Mr. Slavitt could participate in 
decisions affecting UnitedHealth and Optum.

Now, as millions of Americans shop for insurance, federal officials are 
eager to collaborate with an industry they once demonized.

“The relationship between the marketplace and insurers is really 
critical to a successful program,” said Ben Walker, director of open 
enrollment for the federal exchange. “Without that, we don’t have any 
coverage.”



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