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Health Insurers Lobby Spends Millions on Swaying Healthcare

Posted by Jane Akre
Monday, January 25, 2010 12:07 PM EST
Category: Major Medical
Tags: Insurance Industry, AHIP, Wendell Potter, Aetna, Wellpoint, CIGNA, Health Care Reform, Public Option,

Insurance Lobbyists Are Busy



IMAGE SOURCE: iStockphoto/ sick money/ author: Elnur

America’s largest insurance companies spent millions lobbying lawmakers to help craft the healthcare reform debate, according to an analysis on disclosure forms released last week.

The Hill analyzed expenditures and reports that insurance giants, such as Aetna and Wellpoint, as well as America’s Health Insurance Plans (AHIP), increased their spending 24 percent from 2008 to 2009.

Wellpoint was the largest spender among insurance companies. The Indianapolis company spent about $4.7 million in 2009 on lobbying, up 21 percent from 2008.

Humana, based in Louisville, Ky, spent $3.2 on lobbying in 2009. That represents the largest jump iin expenditure almost 80 percent more than it spent the previous year.

UnitedHealth Group spent roughly $4.5 million last year on lobbyists than in 2008.

The granddaddy of them all, their industry association, AHIP spent about $8.9 million on lobbyists last year, a 20 percent hike from 2008.

Insurers were under fire from Democrats for their lobbying against reform legislation being considered by Congress. House Speaker, Nancy Pelosi, referred to the insurance industry as “villans.”

Insurance whistleblower, Wendell Potter, who was with CIGNA for 20 years, watched the industry put profits before people. Speaking before a Senate Commerce Committee he said, "Recently it became abundantly clear to me that the industry's charm offensive, which is the most visible part of a duplicitous and well-financed PR and lobbying campaign, may well shape reform in a way that benefits Wall Street far more than average Americans."

What did they get?

The insurance industry faced severe competition from a government sponsored public option which would have made it difficult to compete in the open market. The single-payer option that would eliminate the need for private insurance companies fast went away.

Sen. Majority Leader Harry Reid scrapped the government-run insurance plan to get the 60 votes needed to pass health care reform.

Medical Loss Ratio

Then there was the medical loss ratio (MLR) issue.

The top number is the amount of every dollar used to pay medical claims, say 80 percent, with the 20 percent going to the administrative expenses, marketing sales, executive compensation, bonuses and profits, which are often invested in real estate and index funds. Underwriters will purge customers by increasing premiums so high the customer has to walk away. 

That’s one of the reasons the percentage of small business offering insurance has dropped roughly in half in the last 20 years to now about 38 percent.

Under health care reform introduced in the House, the insurance companies would have to rebate customers if less than 85 percent of their fee is spent on actual healthcare.

Sen. John D. Rockefeller (D-WV) inserted a compromise provision in the Senate health care bill that required insurers to rebate beneficiaries if their insurer failed to spend 90 percent of premium dollar on medical care.

But the Congressional Budget Office said the 90% could devastate the industry and it was dropped to 85/80 percent. The number is actually higher from money insurers get through risk adjustment.

Medicare pays about 98 to 99 percent of its revenue on claims, reports Frontline in a PBS documentary on the insurance industry.

The National Association of Insurance Commissioners says that MLRs must be at least in the 50-60% range. #

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