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?

It's never a good sign when the firm you hired to conduct a policy analysis is publicly blaming you for its misleading nature barely a day later. Here's PricewaterhouseCoopers clarifying a few details about the controversial report they prepared for America's Health Insurance Plans:

America's Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal:

Harold Pollack is a professor at the University of Chicago School of Social Service Administration and Special Correspondent for The Treatment.

I’m piling on the AHIP party. As three Jonathans have already pointed out today, PricewaterhouseCoopers’s analysis done for AHIP is depressingly one-sided.

That’s too bad for several reasons.

First, PricewaterhouseCoopers is right to note: “Insurance market reforms and consumer protections … would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.” This is a genuine concern. The Senate Finance Committee bill provides insufficient subsidies to make insurance affordable. It doesn’t fix things to let people out of the requirement.

The firm is also right to note that a large proportion of the taxes on “Cadillac” health plans will fall on the affected consumers. I personally prefer even stiffer taxes on health benefits, with one caveat: that the tax be levied only on benefits provided to high-income workers who can afford to pay. Blue-collar unionized workers who make less than six-figure incomes deserve greater protection.

Then we hit the dicey parts. PricewaterhouseCoopers assumes that 100% of these costs will be shifted onto consumers. This extreme assumption is dicey, given consumers’ obvious incentive to shift coverage to cheaper plans and insurers’ obvious incentives to trim their offerings to minimize the tax hit. The memo also presents extreme trend projections that imply Congress will sit idly by and allow these tax provisions to reach a huge proportion of the insurance market. This is, to be kind, counter-intuitive.

Two especially tendentious matters deserve mention. PricewaterhouseCoopers assumes that any reduction in Medicare or Medicaid payments to medical providers will result in “full cost shifting” onto private payers. During the 1980s, eons ago in health policy years, this was plausible. It isn’t remotely plausible now.

One of the most devastating claims in the insurance industry's PriceWaterhouseCoopers report is that, by 2016, even some of the least generous plans offered through insurance exchanges would be subject to the new excise tax on high-value benefits. In other words, within a few years, the tax won't apply only to "Cadillac plans." It will apply to Chevys and maybe even some Kias, too.

MIT economist Jonathan Gruber is one of the most well-respected experts in this field--somebody whose modeling has wide credibility, even among Republicans.  He looked at the PriceWaterhouseCoopers report and tells me that he finds that set of claims "implausible."

Over the weekend, America's Health Insurance Plans circulated a study it commissioned from PriceWaterhouseCoopers. In a memo to AHIP members, reproduced here, president Karen Ignani explained its significance:

The report makes clear that several major provisions in the current legislative proposal will cause health care costs to increase far faster and higher than they would under the current system. The report finds that the proposal “will increase premiums above what they would increase under the current system for both individual and family coverage in all four market segments for every year from 2010-2019.

For example, the analysis shows that the cost of the average family policy is approximately $12,300 today and will rise to:
 
--$15,500 in 2013 under current law and to $17,200 if these provisions are implemented.
 
--$18,400 in 2016 under current law and to $21,300 if these provisions are implemented.
 
--$21,900 in 2019 under current law and to $25,900 if these provisions are implemented.
 
In fact, between 2010 and 2019 the cumulative increases in the cost of a typical family policy
under this reform proposal will be approximately $20,700 more than it would be under the
current system. 

That's pretty damning stuff. And Ignani's description of the report is absolutely correct, at least based on my reading of it.

But is the report itself correct? That's not so clear.