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January 17, 2008

Health insurance companies could split over Democratic proposals

A Gallup poll in November showed nearly two-thirds of Americans think the government should be responsible for everyone having health coverage. The parties are clearly split on the issue.

In broad strokes, the Democratic candidates support a government-legislated solution; the GOP candidates favor a private-market approach. Democratic presidential contenders may ultimately find an unlikely ally: the same big health insurance firms they fight on the campaign trail.

Democratic presidential candidates and even the Republican governor of California, Arnold Schwarzenegger, are pushing what they call universal health insurance proposals. Health insurance lobbyists are pushing back.

Nearly 1,300 health insurance companies are united under the American Healthcare Insurance Providers, a Washington, D.C.-based association. This coalition represents both large and small insurance firms. The large companies may find benefits in the Democratic proposals, while the smaller companies see only burdens.

“It seems to me that the closer we get to actual legislation, the chances are that the coalition will fracture,” said Matthew Holt, a San Francisco-based health-care advocate.

The latest test of the coalition comes in California.

For now the AHIP union remains strong. California’s largest health insurance provider, Blue Cross/Blue Shield, has strongly opposed a health-care bill launched by Gov. Arnold Schwarzenegger, in spite of the bottom-line benefits they could reap from the bill. The bill mandates that individuals purchase health insurance, but prevents health insurance companies from denying coverage based on pre-existing conditions.

“It’s essentially a deal,” Holt said. The California proposal, if approved, would provide Blue Cross/Blue Shield a wave of new clients, he said. Smaller providers, however, would likely find themselves bypassed in the rush of Californians looking for health insurance, Holt predicted.

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Posted by healthinsurance at January 17, 2008 06:33 PM