For the insurance industry, long an opponent of health care reform, it was a striking change: with a new administration coming to Washington, insurers agreed to abandon some of their most controversial practices, like denying coverage to applicants with pre-existing medical conditions.
One of the main architects of the friendly approach, Karen M. Ignagni, the industry’s chief lobbyist, personally pledged to President Obama that insurers would not stand in the way of a sweeping overhaul this time.
For a while, it seemed to be working — until recently, when the insurance industry re-emerged as Washington’s favorite target. “Villains,” Nancy Pelosi, the House speaker, called health insurers. And Mr. Obama derided the industry for pocketing “windfall profits.”
Taken aback, Ms. Ignagni, the 55-year-old chief executive of the trade group America’s Health Insurance Plans, wondered on Tuesday why insurers were being singled out when, in her view, they had accepted that change was necessary.
“Attacking our community will not help get anyone covered,” she said. While taking a conciliatory tack and insisting that insurers remain committed to reform, she says they will aggressively counter the criticism. “What we have to do is make sure we correct the record,” she said.
As the debate heats up, Ms. Ignagni is facing her toughest test. After winning concessions, and consensus, from many insurance companies with competing interests, she now has to keep them together as the assault on the industry picks up. Rather than being cut out of the conversation, her strategy has been to push for changes her members can live with, in hopes of fending off too much government interference.
Despite her efforts to ally the industry with Washington, however, it risks being thrust in the same role it played 15 years ago when it helped derail reform.
For months, it appeared Ms. Ignagni was successfully walking a fine line between convincing Congress that the insurers were serious about changing the way they do business and still protecting the companies’ financial interests from far-reaching government intervention.
When the president called on Ms. Ignagni unexpectedly at a White House meeting in March, she was quick to reassure him, “You have our commitment to play, to contribute and to pass health reform this year.”
But the talk has become increasingly unfriendly of late, as the president and Congress have latched onto the insurance industry’s failings as a main reason for adopting their ambitious overhaul plans.
The president complains about insurers’ profits; the 10 largest insurers earned $13 billion in 2007. And he also frequently refers to his mother’s dispute with her insurer as she lay dying of cancer, contending that the best way to keep companies “honest” is to force them to compete against a government-run plan.
Even as she fends off industry criticism, Ms. Ignagni must try to preserve the current consensus over what changes insurers are willing to make. With the heat on, some companies seem open to further concessions — while others may be tempted to walk away altogether. And while the attacks may bring them together, they could leave some insurers questioning the wisdom of her strategy.
The industry’s biggest player, WellPoint , which operates Blue Cross plans in more than a dozen states and has 35 million members, may have the most to lose. Much of its profit come from selling coverage to individuals — the part of the system potentially subject to the greatest upheaval.
The other big insurers, including the UnitedHealth Group , Aetna and Cigna , rely more on offering group coverage through employers and have a smaller share of the individual market, and so may be more willing to go along with whatever Congress devises.
Ms. Ignagni, who is among the better-paid lobbyists, earning $1.6 million in 2007, insists there is no risk of a rift among insurers. The companies say that they came to their current position after significant discussion, in contrast to the early 1990s, and that despite the current tenor of the debate, they “intend to remain at the table,” said Ronald A. Williams, Aetna’s chief executive.
But Ms. Ignagni refuses to speculate on what the industry will eventually support, saying, “It’s still early.”
A Democratic Senate staff member and then a union official earlier in her career, Ms. Ignagni has represented the interests of the insurers since 1993.
Back then, insurers with the most to lose began a frontal assault against the health care changes proposed by the Clinton administration. One trade association ran a famous ad campaign featuring the fictional couple Harry and Louise voicing concerns about the dangers of government intervention.
Even then, Ms. Ignagni, who led a separate insurance group at the time, pursued a more conciliatory strategy. Her members, large health maintenance organizations, may have benefited from some changes being discussed. They “were open to the concept of reform,” Ms. Ignagni recalled, even if they opposed some specific proposals.
When the two insurance associations merged to form America’s Health Insurance Plans in 2003, Ms. Ignagni — and her nonconfrontational style — won out.
The charm offensive
Over the last three years, she has been steadily laying the groundwork for industry consensus by meeting monthly with influential executives. She says they thrashed out the positions they now support, like not charging sick people higher premiums, even as they disagreed over how far-reaching those changes should be.
“The industry right now is collectively pretty close to the same place — there is a lot of cohesion,” said George C. Halvorson, the chief executive of Kaiser Permanente, the nation’s largest nonprofit health plan.
Ms. Ignagni’s strategy also involved working closely with members of Congress, meeting privately with Senator Edward M. Kennedy’s staff, for example, to try to hammer out the underpinnings of any reform efforts. Unfailingly polite and painstakingly prepared by staying up late to read every page of the proposed legislation she will testify about the next day, she has worked hard to present the industry as supportive of change — as long as it doesn’t go too far.
She emphasized Tuesday that there were no plans to alter tactics. The industry’s recent ad campaign, introduced in July, says, “Let’s fix health care,” and is notably silent on specific proposals it may seek to defeat.
Some skeptics, including Wendell Potter, a former Cigna executive who has become a vocal critic of the industry for putting profits first, contend that insurers’ seeming consensus veils their opposition to real changes in the ways they do business.
Mr. Potter described Ms. Ignagni’s tactic of working with lawmakers as a “charm offensive.”
The proposal to create a government-run plan, which remains one of the main sources of division within Congress, could create the greatest rift among insurers. While the final House legislation seems almost certain to call for such a plan, it remains unclear what the Senate will decide. The Senate Finance Committee is favoring the creation of a different kind of competitor — a health plan to be run by a nonprofit cooperative rather than the government.
If Congress and the president propose a government plan, and some insurers are willing to compromise, it could become “the first fracture in the coalition” of insurers, predicts Michael A. Turpin, a former senior executive for UnitedHealth and now a high-ranking official at USI Holdings, an insurance broker.
WellPoint has broken ranks before. Two years ago, it reportedly spent about $2 million on advertising in California to help defeat Gov. Arnold Schwarzenegger’s proposals to remake the state’s insurance system.
California’s other insurers “were much more willing to play,” said Anthony Wright, a consumer advocate. WellPoint says it opposed California’s proposal because it was flawed. “It wasn’t that we are against reform,” said Bradley M. Fluegel, WellPoint’s chief strategy officer. “We didn’t think it was actually going to work.”
WellPoint says that, like the rest of the industry, it favors the changes the insurers have put forward and welcomes the prospect of tens of millions of additional customers. Some believe the question is whether Ms. Ignagni and the industry can afford not to go along. Health reform “will always hang out over their heads,” Mr. Turpin said. “This is their last shot.”