Karen Ignagni

For decades, health insurance plans have helped individuals, families, and small businesses strike the right balance among affordability, access, and comprehensive coverage. With the Institute of Medicine expected to issue recommendations to HHS this week about which “essential benefits” should be included in health plans that will be offered through new exchanges, this experience holds important lessons for policymakers.

In the commercial marketplace, health plans work with employers and health benefits advisors to determine which benefits or level of benefits will be covered; how much they will contribute to the cost of services; and how they may access medical care through the plan. Through this process, health plans are able to respond and adapt to the varying needs and preferences of employers and consumers. Other programs, such as the Federal Employee Health Benefits Program and the Massachusetts Exchange, rely on this same framework in designing their benefits. Benefit packages are regularly assessed, updated, and refined.

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As working families and small businesses struggle, it has never been more important for the country to address the soaring cost of medical care. Throughout the health care reform debate, discussion centered around health insurance premiums but ignored the most important policy questions facing our health care system: Why are medical costs consistently rising faster than overall economic growth? Why has the use of tests and equipment continued to soar? How have changes in the health insurance risk pool impacted premium rates?

The new health care reform law includes several changes to the way premiums are regulated, but did very little to address the underlying issues that cause premium increases. The legislation include a new federal cap on health plan administrative costs and profits, new processes to review the reasonableness of premium increases, and additional resources to states to conduct these reviews. As final regulations are drafted in these areas it is critical that they be based on objective actuarial standards that take into account all of the fa

If the concept of Accountable Health Care Organizations (ACOs) is to work – and not become another over-hyped and unsuccessful fad – then the country needs to focus less on the question of control and more on the issue of workability. Broadly speaking, our country needs to re-align payment incentives to provide patients more coordinated care in an environment where resources are limited. This will involve rewarding high quality and efficient care and providing disincentives for practices and treatments that fall short.

Health plans are developing partnerships with hospitals and clinicians to achieve these objectives. We can provide support for providers to move away from fee-for-service care toward a more interconnected delivery model through tools and techniques to utilize data to manage risk, identify gaps in care, and provide the necessary infrastructure to connect patients and providers. Path-breaking initiatives are currently underway in the states that can be a building block for future ACO models. For example, health plans are working

There is widespread agreement among health care experts, stakeholders, and policymakers that our health care system needs to do far more to promote quality, reward value, and incentivize prevention and wellness. In fact, as part of the new health care reform law, policymakers are experimenting with new quality initiatives in Medicare, such as patient-centered medical homes, medication management programs, pay-for-quality initiatives, and the development and maintenance of high-quality, accountable provider networks.

Health plans have pioneered these important initiatives. Patients today rely on health plans’ care coordination, disease management, continuous quality improvement, prevention, and wellness programs. These programs have yielded significant results in improving health outcomes, reducing medical errors, reducing complications, and enhancing patients’ quality of life. In addition, many health care experts believe that by improving health outcomes and advancing quality care, these programs and services will also help to reduce the long-term g

A recent analysis by Cory Capps, PhD, a former staff economist at the Antitrust Division of the Department of Justice, found that the data used by the AMA on health plan concentration “are plagued by a number of significant limitations” and “fail basic checks of accuracy and reliability.” For example, the AMA data exclude some types of self-funded plans, a large and growing portion of the market, and show significantly higher market concentration than data available from the National Association of Insurance Commissioners.

In every state, families and employers have multiple choices of both insurance plans and types of coverage. The states that are often cited as examples of high market concentration actually have some of the lowest health care costs in the nation. To the extent that research has raised the question of inadequate competition as a factor in rising health care costs, it has pointed to consolidation among providers, not health plans.

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It is important to put into context how insurance premium regulation works today. First, every state requires plans to submit justification for their rates. Plans must provide backup data to show their rates are actuarially sound and these rates are certified by an independent actuary. Second, states have solvency requirements to ensure health plans are financially sound and able to provide benefits to policyholders. If plans are not able to remain solvent, the coverage that individuals, families and employers rely on would be put at risk.

Much of the past week has not been focused on the real reasons for rate increases in the individual market: a weaker economy causing younger, healthier individuals to forego purchasing insurance and underlying medical cost increases.

As more and more healthy people forego health insurance, the rates for those Americans who need coverage increases. This results in more and more healthy people exiting the insurance market which causes rates to increase even more. This "adverse selection death spiral" has been exacerbated by a weak economy

The latest national health expenditure data demonstrate why health care reform needs to include a long-term strategy to bend the cost curve. Although the recession has brought a reduction in the rate of increase in health care costs, costs continue to grow faster than the overall economy, further straining family budgets and crowding out other urgent domestic priorities, such as education, energy, and the environment.

According to CMS, “these developments reflect the general pattern that larger increases in the health spending share of GDP generally occur during or just after periods of economic recession.” This is consistent with national data and information received from health plans showing that health care costs are expected to increase even further in 2009 due to the underlying growth in the cost of health care services. Specifically, our plans are reporting sharp increases in hospital and physician rate requests; increases in outpatient surgery costs; increased billing for more services provided per emergency room visit; increases in the use and

A new government-run plan would underpay doctors and hospitals rather than driving real reforms that bring down costs and improve quality. The American people want health care reform that will reduce costs and this plan doesn’t do that.

The divisive debate about a government-run plan is a roadblock to reform. It’s time we focus instead on broad-based reforms that will ensure the affordability and sustainability of our health care system

We agree the status quo is not sustainable. That is why health plans last year did something industries rarely do: stepped up and offered solutions to address the health care concerns raised by the American people. We proposed health insurance reform to guarantee coverage to all Americans, eliminate pre-existing condition exclusions and rescissions, and no longer base premiums on a person’s health status or gender. To keep coverage as affordable as possible, these reforms must be paired with an effective coverage requirement to get everyone into the health care system.

New health insurance reforms and consumer protections will solve the problem without creating a new government-run plan that will disrupt the quality coverage that millions of Americans rely on today. We share the concerns that hospitals, doctors, employers, and patients have all raised about the significant unintended consequences of a government-run plan.

Health care reform must also include a serious commitment to cost containment to ensure coverage is more affordable and to pu