Insurance industry fights back with PriceWaterhouseCoopers report

posted at 11:36 am on October 12, 2009 by Ed Morrissey

Until now, the health-insurance industry has mainly held its fire against the ObamaCare proposals in Congress, hoping that its givebacks would be enough to sate the Democratic class warfare that erupted this summer.  Now, however, they have apparently taken off the gloves with a new analysis by accounting firm PriceWaterhouse Coopers.  The study predicts that the Baucus plan would increase premiums for an average American family by $4,000 per year, a breathtaking increase from a plan that purports to save costs:

After months of collaboration on President Obama’s attempt to overhaul the nation’s health-care system, the insurance industry plans to strike out against the effort on Monday with a report warning that the typical family premium in 2019 could cost $4,000 more than projected.

The critique, coming one day before a critical Senate committee vote on the legislation, sparked a sharp response from the Obama administration. It also signaled an end to the fragile detente between two central players in this year’s health-care reform drama.

Industry officials said they intend to circulate the report prepared by PricewaterhouseCoopers on Capitol Hill and promote it in new advertisements. That could complicate Democratic hopes for action on the legislation this week.

That prompted a rather snide — and laughable — response from the Obama administration:

“Those guys specialize in tax shelters,” said Nancy-Ann DeParle, director of the White House Office of Health Reform. “Clearly this is not their area of expertise.”

Er, what?  Health insurance premiums are not the area of expertise for health-insurance companies?  Accounting is not the expertise of accounting firms?  We can compare that to the White House, whose expertise thus far has been in getting elected, and not much else — certainly not economics, military strategy, or governance.

This doesn’t surprise me in the least.  The Baucus plan is chock-full of fees and taxes, which Democrats keep insisting will punish those meanie insurance executives and doctors who steal tonsils and feet for big, big money.  As with all such penalties on producers, the costs get borne by the consumers.  Given the wide-randing taxes on medical devices and the “fees” Baucus envisions for an industry with an average profit margin of 3.3%. I’d actually guess that the $4,000/year increase may shoot a little low.

If we want to make health care more available and more affordable, we need to avoid imposing new costs on the industry and remove pricing opacity.  This isn’t brain surgery, another discipline for which this White House doesn’t have expertise.


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