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When Dogs Bark Softly

The Obama administration skipped over a lot of the details on Thursday when it unveiled its principles for health care reform. But among the few specifics was a call to reduce payments the goverment makes to private insurers who operate as part of the Medicare Advantage program.

The rationale for making these payments is that virtually every unbiased authority who has looked at the payments has concluded they are too high--that what the plans offer do not justify the extra money they're getting. As always, one person's waste is another person's profit. Insurers have made good money on the Medicare Advantage program. And that undoubtedly explains why America's Health Insurance Plans (AHIP), the lobbying group for insurers, is not too happy about this provision:

As policymakers evaluate the entire Medicare program, including Medicare Advantage, as part of health care reform, it is vital that seniors continue to have access to the benefits and services they rely on.  edicare Advantage plans provide care coordination, disease management, and prevention programs for seniors and reward clinicians for delivering quality care to patients. Unfortunately, this proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system. A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive. 

I think AHIP is wrong about this. Overpayment to private plans is an old story with Medicare. And at a time when the government must find at least a trillion dollars (maybe a lot more) over ten years to finance coverage expansions, it's one of the most obvious paces to look. 

But that's not what struck me about the statement above. With so many profits on the line, such criticism is altogether expected.

What struck me was the context. It came in a press release from AHIP--in the fourth paragraph. And the first three praise the administration for putting forward a comprehensive health care proposal:

Today’s budget submission sends a signal to the American people that this Administration is serious about prioritizing health care. We applaud the President for laying out a bold framework and setting aside significant resources to put our nation on a path towards comprehensive health care reform, which is a goal that has eluded our country for more than a century.

And, after touting its own published plan for health care reform, AHIP goes on to vow that "Health plans will continue to be constructive participants in the health care reform discussion. We recognize that to achieve reform of this magnitude, every stakeholder group will be expected to contribute and will be challenged to innovate, perform better, and be held accountable for results."

I've read AHIP's plan and don't think much of it. I'll be extremely surprised if and when Congress finally approves a bill, the insurers are on board with it. (If they are, it might speak poorly of the bill, given that what's good for insurers is frequently bad for America.) But the fact that the insurers are still playing nice is noteworthy, to say the least.

It could mean that that insurers believe reform stands a good chance of passing, in which case they want to be--to quote a phrase I once heard--at the table instead of on the menu. It could mean that they're contemplating seriously the trade-offs in a universal system--and the benefits of millions of new customers, which is what many of the reform plans under consideration would provide. It could be that they are simply biding their time, rather than take on a popular president and idea that--in the abstract, at least--is extremely popular.

Whatever the reason, I suspect this is a big reason why Obama left the principles so vague for now--to keep as many of the potentially hostile lobbies from going ballistic, at least for the moment. Reformers are going to have to have some fights. But perhaps the Obama adinistration figures there's no point in starting them before necessary.

The danger of this strategy, of course, is that you implicitly concede too much ground, too soon. The absence of a public insurance option--one of the reform ideas most anathema to AHIP, along with many other lobbies--has already drawn some scrutiny from the left, as it shoud. (Here's Brian Beutler.) There's a fine line to walk here and, alas, we won't know until it's all over whether decisions like these make sense.

--Jonathan Cohn