FACT CHECK: Health Insurers Cherry-pick Facts

In its assaults on a Democratic health care overhaul bill, the insurance industry uses facts selectively and mixes accurate assertions with misleading spin and an embrace of worst-case scenarios.

Take the 30-second TV spot that America's Health Insurance Plans, the industry's trade group, was running this week in six states as the Senate Finance Committee approved overhaul legislation.

With a series of beleaguered-looking elderly people on camera, a soothing female voice says accurately that Congress has proposed cutting more than $100 billion from Medicare Advantage. The program, administered by private companies that provide extra services like eye and dental care, serves about a quarter of Medicare beneficiaries, more than 10 million people.

Then the announcer adds, "The nonpartisan Congressional Budget Office says many seniors will see cuts in benefits." Words flash on the screen for three seconds saying, "50 percent reduction in extra benefits."

The announcer's words are true _ but could be easily misunderstood to mean that basic Medicare coverage is at risk.

The budget office's director, Douglas Elmendorf, has said that as a result of the proposed cuts, the extra benefits Medicare Advantage recipients receive would be halved over the next decade. But the ad leaves unspoken the fact that under the Finance bill, Medicare coverage for doctors, hospitals and other basic services would remain fully intact, with no reduction in benefits.

The ad also fails to mention the reason senators targeted Medicare Advantage for savings: The program is expensive for the government to administer, costing about 14 percent more per recipient than regular Medicare.

Robert Zirkelbach, the trade group's spokesman, says the ad does not attack anyone.

"Seniors have a right to know how the current legislation will impact their health security," he said.

Even so, the ad illustrates a favored tactic of Washington interest groups, which is to arouse worry about a bill among a key constituency _ in this case, elderly voters.

"Call your senators. Tell them we need health care reform that protects seniors," the announcer concludes.

A study the health insurers released earlier this week takes similar liberties. It concludes that Democrats' health care effort would drive up premiums for insured people, based on cherry-picking convenient facts and perspectives. It's an example of the classic lobbying tactic of commissioning a report that, predictably, reinforces an interest group's views.

The study only examined four parts of the Finance bill that it said would boost consumers' costs. It ignored provisions aimed at making health care more affordable, such as exchanges whereby companies would compete for customers and subsidies to help lower-income people afford policies.

PricewaterhouseCoopers, the financial analysis firm the insurance industry commissioned to write the report, issued a statement this week noting it had been asked to only focus on four aspects of the bill: its weak enforcement mechanisms for the requirement that everyone buys insurance, an excise tax on expensive insurance policies, cuts in overall Medicare spending and fees on health care providers.

Provisions aimed at reducing costs, if successful, "would offset some of the impacts we have estimated," the accounting firm acknowledged.

One conclusion the report draws was mirrored by a fresh study released Wednesday by the Blue Cross and Blue Shield Association: For the health overhaul to work, there must be strong ways to enforce the requirement that people buy insurance.

Before the Finance Committee approved its bill, senators reduced the fines uninsured people would have to pay. The insurers argue that means many young, healthy people would remain uninsured, driving up costs for everyone else who purchases insurance _ a conclusion that analysts generally agree is valid.
"Gee golly whiz. I could pay a $400 fine and get insurance when I need it, or pay $8,000 in premiums" per year, said Robert Laszewski, a private health policy analyst. He said the choice many families would make is "blindingly obvious."

The insurers' study concludes that insurance companies, medical device makers and other providers will pass on to consumers all the new taxes and fees the Finance bill imposes. It also assumes that doctors, hospitals and other health care providers would fully pass on the cuts lawmakers would make in Medicare, which total about $500 billion over 10 years.

It's an economic fact of life that businesses generally pass on the costs of taxes by raising prices. It's also fair to assume that when doctors and other providers see a reduction in income from their Medicare patients, they seek to make it up, if possible, from the rest of their patients.

Yet concluding that providers will pass the full cost of these changes to their customers ignores a basic assumption of the health overhaul effort. The goal is to increase competition and reduce the rate of growth currently assumed in medical costs. If the overall legislation succeeds in doing that, there would be less incentive for providers to pass on those costs _ and more incentives for them to compete by keeping prices low.

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