Ben Cutler: An Insurance Industry CEO Responds to Healthcare Reform

Is the healthcare insurance industry the scapegoat for rising premiums?  In the inaugural episode of the Chuck Lauer Show,  presented by Alter+Care, the former publisher of Modern Healthcare Magazine talked about the insurance industry’s take on healthcare reform with Ben Cutler, Chairman and CEO of USHEALTH Group, Inc., who previously led Fortis Healthcare.  Cutler currently serves on AHIP’s Executive Committee, serves on AHIP’s Board and is also the Chairman of AHIP’s Membership Committee.  The Chuck Lauer Show is an ongoing conversation about the future of healthcare with the leaders and thinkers who are shaping a new direction for healthcare in the United States. 

Cutler, who has spent more than 30 years in the healthcare insurance industry, recalled the ongoing national debate that began nearly 20 years over HillaryCare with the objective of how to provide universal coverage for the more than 50 million uninsured Americans.  Cutler believes that the Obama administration has chosen to focus on access and doesn’t sufficiently address affordability issues.  Healthcare industry groups recognized that the day would come when reform would be a top-line issue and that we would not be well served by just saying “no”.  Cutler says “We’ve worked hard on positioning the industry to accommodate reforms and tried to be very accommodating because getting more people covered is a laudable objective.”

As the healthcare reform bill was drafted, it soon became clear that the insurance industry would have a problem with some of the issues.  Unfortunately, according to Cutler, the politicians decided they needed an enemy and “that turned out to be us.  We continue to be vilified as an industry”, a situation that could – and should — have been avoided.  The Patient Protection and Affordable Care Act will have some unintended consequences in terms of how the legislation will affect the behavior of various stakeholders who comprise the healthcare economy – consumers, providers, insurers, regulators, etc.  It is inevitable that the insurance industry will have to raise rates if they are to comply with the healthcare law, which essentially constitutes a new tax on the American people.

Cutler cites the example of the $5 billion set aside to subsidize people in high-risk pools.  The government estimated that by this time, upwards of 500,000 individuals would be enrolled in these pools.  So far, just 8,000 people have signed up, an example of where government expectations were totally unrealistic.  Additionally, there is the issue of pre-existing conditions, which the government has characterized as an industry-abusive position, and one which relates to affordability of coverage.  According to Cutler, if people buy homeowners’ insurance only after their house catches fire, the premium obviously would be higher.

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