US insurer cites failings of health plan

A Republican plan to turn the US Medicare programme into a voucher scheme would be impossible to implement, according to one of the biggest health insurers that called on the White House to be more flexible in the roll-out of the healthcare overhaul that passed last year.

Michael McCallister, chief executive of Humana said: “It quickly got categorised as a voucher programme as opposed to a premium support programme.

“I don’t think it has any political legs at this point.”

Medicare is the government-run health insurance programme for senior citizens. The remarks come as healthcare spending has returned to the centre of the budget fight being waged between Republicans and Democrats in the US.

The controversial “Ryan plan”, proposed by Paul Ryan, head of the House budget committee, that would address the US’s long-term fiscal deficit by replacing direct payments for healthcare with vouchers to help retirees buy private medical insurance, passed in the Republican-dominated House of Representatives but failed to win approval in the majority-Democrat Senate.

Republican leaders have said the idea remains “on the table”.

Mr McCallister said he would not call for a full repeal of the healthcare reform legislation, arguing he does not want to start from square one. However, he called on Barack Obama, US president, to be more open-minded about how to implement the law, warning of “severe” unintended consequences.

He said: “The biggest disruption has been in the individual health insurance market so far.

“There’s an awful lot of things going on that nobody really understands right now.”

According to Mr McCallister, additional taxes on the healthcare system are raising costs and the complexity surrounding the law is making it difficult to execute. He said that small and medium-sized companies will start dropping their group insurance plans once insurance exchange programmes are set up in 2014.

That idea was buttressed by a McKinsey study earlier this month that said at least 30 per cent of US employers would stop offering health insurance in 2014, when the exchanges are set to be launched.

“The shift away from employer-provided health insurance ... will make sense for many companies and lower income workers alike,” McKinsey said.

The Obama administration questioned the study’s methodology and contended that employers will not have incentives to drop coverage because of the law.

Mr McCallister said that even though Humana sees positives points to the new law, it is still lobbying for changes to it.

“This is part of the conversation about how to fix this,” he said.