It’s
now clear that health care “reform” is a bonanza for the insurance
companies. But these acquisitive businesses want even more. Their
efforts to increase their profits are at the center of the clandestine
Senate and House negotiations currently shaping the health bill.

First of all,
they want to stiffen a requirement that millions of Americans buy
insurance. For many among those millions, this would mean facing “the
uneasy choice of buying insurance they can’t afford or paying a stiff
penalty they also can’t afford,” as Sen. Charles E. Schumer, D-N.Y.,
put it.

The bill
approved by the Senate Finance Committee imposes a penalty of $750 a
person on those not buying a policy. That isn’t big enough for the
insurance companies, which have eagerly anticipated the day when
everyone must purchase a policy. “This [what the industry considers a
low penalty] is likely to result in millions of people foregoing
coverage,” said the BlueCross BlueShield Association.

The fines are a
major issue as senators meet with administration officials to prepare a
bill that will eventually go to the Senate floor for a vote. The
penalties are in every version of health care legislation floating
around Congress.

They are also
important to a growing segment of the economy: those fired from
companies that have downsized, gone bankrupt or simply closed their
doors. Such people are now thrust into the competitive and complex
private insurance market. Under the bills pending before Congress, they
would be eligible to buy insurance in government-sponsored exchanges.
These would provide places—probably Web sites—where consumers could
pick from a variety of insurance policies. Moderate- and low-income
Americans would be eligible for government subsidies; the poor would
receive Medicaid. But even with subsidies, the policies will not be
cheap. Some hard-pressed families would be forced to opt out of
insurance.

According to estimates in an interactive chart compiled by the Henry J. Kaiser Family Foundation, under the Senate
Finance Committee bill a family of four headed by a 52-year-old and
with an income of $60,000 a year would receive a $7,522 subsidy but
would still have to pay $6,263 a year for its $13,886 annual premium.
That’s high for a family with that level of income.

Subsidies would
be higher for those earning less. Families with incomes exceeding
roughly $90,000 a year would not get a subsidy. 

The insurance
industry’s biggest sales targets would not be these families; it would
focus on young people, who generally have a low illness rate.

The Kaiser
Family Foundation estimates that a single 30-year-old earning $43,200 a
year could buy a health insurance policy for $6,607. A $1,423 subsidy
would bring the annual cost down to $5,184. The insurance industry
figures that this person—classified in the business as a “young
invincible”—would rather pay a $750 fine than $5,184 in premiums. That is why the BlueCross BlueShield Association and America’s Health
Insurance Plans, the industry lobbying group, want to hit these young
invincibles with higher fines.

The companies
are expected to continue to expand marketing strategies to persuade the
young to buy insurance. Judy Dugan, research director of Consumer
Watchdog, warned that the insurers would “cherry-pick” young people,
offering free gym memberships and other health-oriented programs. “They
will try to attract the healthy and young,” she said, leaving the older
and potentially less healthy segments of the population to the
insurance exchanges.

The insurance
companies also want to be free to charge high prices. That is why they
don’t want the government selling policies—the public option—in the
exchanges. “They don’t want the government selling what would likely be
cheaper policies,” Dugan said.

To sum up, the insurance lobbyists’ goals are clear:

— No government option.
— Stiff fines so almost everyone will buy policies.
— Maintenance of the monopoly status that big insurance companies have in most areas.
— Lax regulation so the companies can sell policies with terms and
prices so complex that few consumers will be able to understand them.

Congressional
friends of the consumer are playing defense. For example, Sen. Patrick
Leahy, (D-VT), has been fighting the insurance monopoly for years, and
lately he has been joined by Sen. Schumer. Don’t count on them winning.

President Barack
Obama gave the advantage to the insurance companies and other members
of the medical lobby early in the game when he turned over leadership
to Chairman Max Baucus of the Senate Finance Committee and other
conservative small-state Democrats, plus Republican Sen. Olympia Snowe
of Maine. Baucus is a leading recipient of contributions from health
industry firms and their lobbyists, having received $453,649 in 2007-2009, according to a study by the Sunlight Foundation and the
Center for Responsive Politics. The study found “a web of campaign
contributors” deeply involved in the health care fight.

Obama also
signaled in his health reform speech to Congress last month that he was
willing to abandon the public option. These concessions cost him
control.

The president
was hurt even more by media fascination with the so-called grass-roots
rebellion against health reform during the summer. Also damaging was
media failure to cover peaceful pro-reform demonstrations against
insurance companies. As Peter Dreier and Todd Gitlin wrote in the Columbia Journalism Review, “No one packed heat, no one screamed
at a member of Congress, no one called anybody a Nazi, no fistfights
broke out. So—no story.”

Some sort of
health legislation is expected to reach Obama’s desk. But for it to
have any meaning—to provide a framework on which he can build something
stronger in the future—he must crush his arrogant opposition. He should
start with Big Insurance.

Bill Boyarsky is the author of six books. His latest is “Inventing L.A.: The Chandlers and Their Times” (September 2009).