Reading the tea leaves

Some time ago, I mentioned that I was speaking to some health insurance executives, who were not nearly the anti-reform group you’d expect them to be, given the rhetoric you hear on the TV. They were planning, and well-equipped, to move forward with PPACA. Sarah Kliff, attending the JP Morgan Health Care Conference in San Francisco, confirms this:

The Congressional Budget Office estimates 32 million Americans will gain health insurance by 2019 if the law stands. For health insurers, that represents a potential boon for both their individual market business as well as in the Medicaid market, where states regularly contract with private insurers to manage care.

“The worst is behind them,” says Ipsita Smolinski, president of Capitol Street and senior advisor to McKenna Long & Aldridge, of the outlook for health insurers. “There was so much uncertainty last year. But with the MLR and rate review regulations out, investors know they have a pretty viable future.

“There was initially a concern among investors that health reform would kill their business model. Now, that hasn’t happened.”

There’s so much in just that piece of the article. First of all, insurance companies see the exchange market, subsidies/mandates and all, as a boon to their business. They see the Medicaid expansion the same way. I think it’s likely that the pharmaceutical and medical device industries feel similarly.

Second, there was concern (not without cause) that health care reform could have gone much worse for industry. For instance, we might have would up with a public option, or – gasp – a single payer system. That would have been a death knell for the insurance industry. But they defeated those plans and got something to their liking.

Finally, they are thrilled that the “uncertainty” is behind them. In other words, they don’t want to see a repeal; they don’t want to start over.

Don’t believe me?

Health insurers spent barely anytime discussing Republicans’ repeal efforts. Aetna’s Zubretsky touched on the subject briefly only to say that Republicans understand that a rifle shot approach to tearing out specific health reform provisions, particularly the individual mandate, would not bode well for their business.

“The unintended consequence of repealing and replacing part of the legislation is the biggest risk here,” he said. “If guaranteed issue stays but the enforceable mandate disappears, you need another mechanism to make the costs in the risk pool work.”

Zubretsky said Aetna has been in touch with the GOP on the issue and “believe the Republican leaders we’ve been talking to understand the consequences of decoupling the mandate from the guaranteed issue.”

You have often heard those who favor reform complain about the power of the health insurance industry. I think those who favor repeal are about to feel it.

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