A little less than a month ago, the Blue Cross Blue Shield Association--the trade group representing state-based Blue Cross and Blue Shield plans--released a misleading study suggesting that health care reform would mean higher premiums for small businesses and individuals buying coverage on their own.
The basis for the findings were calculations by the consulting firm, Oliver Wyman. But Oliver Wyman, by its own admission, had ignored or slighted elements of health care reform that promised to reduce premiums, such as the creation of insurance exchanges for people who don't get coverage from large employers and the imposition of a tax on generous plans. When MIT economist Jonathan Gruber analyzed the full Senate Finance Committee health bill, including these and other cost-cutting measures, he concluded that premiums would actually be "considerably lower":
:..for those facing purchase in the non-group market, the SFC bill will deliver savings ranging from several hundred dollars for the youngest consumers to over $8500 for families. This is in addition to all the other benefits that this legislation will deliver to those consumers--in particular the guarantee, unavailable in most states, that prices would not be raised or the policy revoked if they became ill.
In part because the Association's paper came on the heels of another, even more egregious insurance industry study, most of the media ignored it. But it looks like at least Blue Cross affiliate has found a new way to put the material to use: By distributing the information to small businesses that buy its coverage.
TNR has obtained a pair of letters that Blue Cross Blue Shield of Illinois and its parent company have sent to those small businesses in the last two days.
By releasing a transparently hyperbolic and self-serving study on the effects of health reform, the insurance industry appears to have blundered in a big way. They discredited themselves in the eyes of the media elite, alienated potentially sympathetic members of Congress, and rallied Democrats around a common foe.
So what are they doing now? They seem to be trying the same stunt again, with a brand new study. It's not as deceptive as the last one. But it's not going to win any points for intellectual honesty, either.
This time the study's sponsor is the Blue Cross Blue Shield Association (BCBSA), rather than America's Health Insurance Programs. The hired gun accounting firm is Oliver Wyman, instead of PriceWaterhouseCoopers. But the message is the same as before: Pass reform, as currently envisioned, and insurance premiums will go way up.
The study, which BCBSA distributed to members of Congress today, raises three concerns:
1. In the absence of a strong individual mandate, young and healthy people will opt out and/or try to game the system, driving up premiums for everybody else.
2. Restricting the ability of insurers to vary premiums by age will mean dramatically higher insurance prices for the young.
3. Raising the level of benefits all policies must provide will make policies overall more expensive.
What's the end result? According to the report, these flaws mean premiums will jump by more than 50 percent. (A lot more, actually, depending on how you do the math.) Yowza!
But wait...how did Oliver Wyman arrive at that figure?
A new paper on walk-aways (i.e., defaulting on a mortgage whose payments you can still afford because it exceeds the value of your home) has been making the rounds, which means another opportunity to wheel out those debunking skills.
The study -- a copy of which I've read but haven't seen on the web anywhere -- was conducted jointly by credit bureau Experian and consultancy Oliver Wyman and claims to use "extremely stringent" criteria in identifying strategic defaults, i.e. homeowners who are financially able to make mortgage payments but choose not to:
We define such borrowers as those who rolled straight from current to 180+ [days past due], while staying current on all their non-real estate debt obligations, 6 months after they first went 60 [days past due] on their mortgage.
