Health Insurance Industry to Congress: “We will drop risk rating.”

The boundaries of the healthcare reform debate took another dimension this week as representatives of two large health insurance trade groups sent a message to Congress that said they were now willing to drop “risk rating’ of health insurance policies. The offer from America’s Health Insurance Plans (AHIP) and the Blue Cross and Blue Shield Association (BCBSA) is a potentially significant shift in the debate about overhauling the nation’s healthcare system.

It was reported in the Boston Globe that in a letter to key senators, the two insurance industry groups said their members are willing to “phase out the practice of varying premiums based on health status in the individual market” if all Americans are required to get coverage.

According to the New York Times, the trade groups stated in their letter that if Congress enacted an enforceable requirement for everyone to carry health insurance, “we could guarantee issue of coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market.”

However, according the Times article, the trade groups didn’t stop there. They also said they could accept more aggressive regulation not just of their premiums, but also of their benefits, underwriting practices and other activities. Such strict regulation, they said, would make it unnecessary to create a new public insurance program offered through the federal government.

The Times pointed out that insurers remain staunchly opposed to creation of a government-run health insurance plan. But the industry’s willingness to change its rate-setting practices could make it easier for Congress to reach a consensus on legislation to overhaul health care.

This is indeed an interesting development in the positioning that is now taking place in the healthcare reform debate. Just last Friday I commented on Sen. Chuck Grassley’s (R-IA) statement indicating that erecting some form of new government benefit, which Democrats refer to as the public plan option, is a deal-breaker for Republicans. Could this concession on the part of the industry be enough to get around this hurdle to reforming healthcare?

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