Insurers say system reform won't put them out of business

There could be boosts in business, company executives predict. Meanwhile, they offer some answers to a House subcommittee examining underwriting and denial practices.

By Emily Berry — Posted Sept. 28, 2009

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Insurance executives during a September meeting assured investors that, no matter what happens in health system reform, their companies would continue to exist.

A few days later, before members of Congress, a panel of executives for some of the same companies laid out reasons why the companies should continue to exist.

The timing was coincidental. But as the debate over health system reform began to narrow in focus, health plans appeared confident that their business model would stay essentially the same, and could even get a boost from reform.

With the potential for a public plan that would compete with private plans in flux, and a requirement for people to have health insurance gaining traction, executives told investors that reform could represent a large pool of new customers, rather than a threat to profits.

"We think the ability to reform the insurance markets has the potential to bring a substantial number of new customers to the market," Aetna Chief Executive Officer and Chair Ronald Williams told investors and analysts at the New York conference, hosted by Morgan Stanley.

Williams and the other executives, who spoke separately, each prefaced comments about reform with the caveat that nothing was final yet, but things looked clear enough to make some guesses as to what reform will mean.

Investors wanted to know how each company's business mix might change.

Executives from Cigna, Coventry Health Care, Humana, WellPoint and Aetna said their best guesses were that reform would not include a public option, but would include co-ops in each state, with an individual mandate and new rules that would require insurers to issue coverage to anyone regardless of health status.

Executives also reminded investors of what probably would not change with reform. As Cigna President and Chief Operating Officer David Cordani pointed out, the vast majority of its business is administrative-only, under agreements where an employer pays claims and assumes risk, paying the health plan to send bills and process payments to doctors and hospitals. Those plans are regulated under a federal statute that looks unlikely to change with system reform.

And even with possible cuts to Medicare Advantage, the Medicare population remains a growth market for companies that can manage costs well, Humana President and CEO Mike McCallister told investors.

"Long-term it looks pretty good, although we are clearly going have some noise coming our way for a few months," he said.

Days after the investor conference, a panel of six executives for UnitedHealth Group; WellPoint; Aetna; Humana; Cigna; and Health Care Service Corp, the parent company for four Blue Cross Blue Shield-affiliated plans; appeared before the House Subcommittee on Domestic Policy, chaired by Rep. Dennis Kucinich (D, Ohio).

The hearing was titled, "Between You and Your Doctor: the Bureaucracy of Private Health Insurance."

Kucinich is author of HR 676, a bill that would extend Medicare coverage to all Americans. His co-author for that bill, Rep John Conyers Jr. (D, Mich.), visited the committee hearing and was among those who questioned the executives about what value private insurers bring to the public.

During the first half of the hearing, held Sept. 16, patients, caregivers and consumer advocates testified about the ways they believed insurers had improperly denied care for themselves or loved ones, or delayed care until the eventual; approval was moot.

Health plan executives the next day testified that health insurers bring more to the public than interference and paperwork between doctors and patients.

"I believe the private system is important because it brings innovation, it brings energy, it brings change, it brings ideas that are often used in the public sector system as well," said Richard Collins, senior vice president for underwriting, pricing and health care economics at UnitedHealthcare. "I think we can have both a public and private system."

Republicans present at the hearing, including Illinois Rep. Aaron Schock, argued that the private system works well, and that private insurers pay doctors better and deny care less than does Medicare.

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