Aetna’s Williams Criticizes Public Health-Plan Idea (Update3)
By Catherine Larkin
March 24 (Bloomberg) -- Aetna Inc.’s chief executive officer, Ronald A. Williams, said a Democratic proposal to make government-run health insurance available to more Americans would shift costs rather than curb them.
Williams, in written testimony today at a Senate panel in Washington, said a new public plan would “most likely” use rates in Medicare, the U.S. government program for the elderly and disabled. Those rates are lower than what private companies pay to health-care providers, he said, and costs are transferred to make for “underpayments” in government programs.
President Barack Obama’s budget called for a $634 billion, 10-year plan to help the 46 million Americans without health insurance. A proposed public health plan to compete with private insurers has been one of the most contentious issues in discussions about how to spend the money, as companies and Republicans say it would stifle innovation and create unfair cost advantages.
“On an aggregate level, commercial payers incur approximately $89 billion more in costs than they would if public and private payers all paid equivalent rates,” Williams told the Senate Health, Education, Labor & Pensions Committee. “Expanding the use of low public payment rates would mean expanded cost-shifting for our health-care system.”
Aetna, of Hartford, Connecticut, fell $1.08, or 4.4 percent, to $23.25 at 4:02 p.m. in New York Stock Exchange composite trading. The company has dropped 18 percent so far this year, in line with other U.S. insurers.
Potential ‘Deal Breaker’
Obama supports a public coverage plan modeled on Medicare as a way to provide more people with health care and reduce costs. The president has said he recognizes concerns about that approach among insurers and Republican opponents. The top Republican on the Senate Finance Committee, Senator Charles Grassley of Iowa, called the proposal last week a “deal breaker.”
Karen Pollitz, a research professor at Georgetown University’s Health Policy Institute in Washington, told the Senate panel that a government-run plan would be a valuable safety net for people with chronic illnesses or high medical costs that make them unattractive to private insurers.
“We need to change the business model and how private insurers compete to take care of people when they’re sick and not just to avoid them,” Pollitz said. “Given the track record on that is sparse, it’s very helpful to have a public health plan for that purpose.”
To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.
Last Updated: March 24, 2009 16:14 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=apLzpQwG90K4&refer=home
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