AHIP-PWC Report: Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage

A new headline on CNN, Pushback grows against insurance industry report, points out some significant criticisms of the AHIP-PWC report as self-serving and flawed.

This morning I identified a link where the much publicized report may be accessed:
Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage (October, 2009). (Unfortunately the authors of the report are not listed.)

Review of the analyses in this report reveals methodological features that require comment. CNN has reported (Accessed October 13, 2009):
The report from the group America's Health Insurance Plans concludes that, under the Baucus plan, the costs of private health insurance would rise by 111 percent over the next decade. Under the current system, costs would rise by 79 percent, the report said.

This scenario is partially founded on the following proposition regarding the excise tax to be imposed on Cadillac plans. (See page 6 of the report.) This proposition appears spurious. (Certainly in the next ten years it would be reasonable to assume that the threshold values for assessment of the excise tax would be adjusted):

PwC also examined the impact of the excise tax on the mandated plans expected to be offered under the state health insurance exchanges detailed in the Senate Finance Committee Bill. We estimate that in many metropolitan areas, which tend to have higher than average medical costs, the lowest option plan (Bronze Plan) would be considered a "Cadillac plan" as early as 2016. By 2016 at least one of the mandated plans will be considered a "Cadillac plan" and be subject to the 40 percent excise tax in 17 of 50 states. By 2019 at least one of the mandated plans will be considered a "Cadillac plan" and be subject
to the 40 percent excise tax in 24 of 50 states.

The "baseline" assumptions for this scenario from the Senate Finance Committee Bill include a 6 percent annual trend (premium increase); 15 percent supplemental load for additional benefits, age, morbidity and other factors. Certainly the CBO should examine this industry financed report to evaluate data and assumptions at the foundation of its conclusions.