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Life Health > Health Insurance > Health Insurance

Obama Health Reform Proposal Relies On Private Insurers

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Sen. Barack Obama has attacked health insurers on the campaign trail but come up with a health finance reform proposal that bears some resemblance to the one developed by America’s Health Insurance Plans, Washington.

Obama, the junior senator from Illinois who is campaigning for the 2008 Democratic presidential nomination, unveiled his proposal, “Barack Obama’s Plan for a Healthy America,” during a speech in Iowa City, Iowa.

Unlike AHIP, however, Obama says high health insurance costs are due partly to a lack of competition in many health insurance markets.

“The insurance business today is dominated by a small group of large companies that has been gobbling up their rivals,” Obama says in a written version of the speech. “In recent years, for-profit companies have bought up not-for-profit insurers around the country…There have been over 400 health care mergers in the last 10 years, and just two companies dominate a full third of the national market.”

Obama has proposed preventing “companies from abusing their monopoly power through unjustified price increases.”

He also has proposed requiring most employers to provide health coverage or contribute to the cost of running a national plan, and has recommended setting up a National Health Insurance Exchange for individual health coverage that might compete head-to-head with websites and traditional insurance agencies that sell coverage to individuals. Insurers selling through the exchange would “have to issue every applicant a policy, and charge fair and stable premiums that will not depend upon health status,” Obama says.

But he echoed AHIP by calling for rapid adoption of electronic health records and other health information technology systems; improved care management programs; use of quality-based physician compensation programs; creation of a new organization that would evaluate the effectiveness of drugs, devices and procedures; expansion of public insurance programs for low-income Americans; and continued reliance on private insurers and group health plans to supply for health coverage for most U.S. residents.

AHIP President Karen Ignagni says members of her group believe Obama’s negative rhetoric clashes with the reality that health insurers themselves have helped to develop many of the ideas in Obama’s own health reform proposal, such as care coordination.

On the other hand, like Obama, “we believe putting a priority on health care reform is very important,” Ignagni says.

AHIP also agrees with the general concept that any reform efforts must involve both public and private efforts, Ignagni says.

Individuals who reacted to Obama’s proposal on his official campaign blog gave the proposal mixed reviews.

Some commenters criticized Obama for his willingness to continue to rely on private insurers and employer-sponsored health plans, but one commenter predicted that implementing Obama’s proposal to regulate some carrier rates would cause insurers to flee from the health insurance market.

Another commenter pointed out that health insurers rarely achieve profit margins over 3%. “The real issue I think is at the level of the hospitals,” that commenter writes. “They negotiate volume deals with health insurance companies, but we as consumers have no way of comparing prices.”


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