Government-Health Complex Continues to Congeal

The government-health insurance complex continues to congeal as AHIP, the health insurers’ main trade association, picked former Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner to lead it.

Although not confirmed as CMS Administrator until May 2013, she acted in that capacity since December 2011, after the administration fumbled the appointment of Dr. Donald Berwick to the position. In other words, she is the grande dame of Obamacare.

Although forgotten by most people, the part of the federal operation that was supposed to run Obamacare, the Center for Consumer Information and Insurance Oversight (CCIIO), was originally supposed to stand beside other agencies within the US Department of Health & Human Services, not be a part of CMS. CMS, after all, was designed to manage Medicare and Medicaid, not private insurance.

Because Obamacare ended up inside CMS, the CMS Administrator ended up ruling a vast empire especially important to health insurers. The industry faces a challenge, in that it is heavily invested in Medicare Advantage and Medicaid managed care, which are very profitable. Obamacare, on the other hand, is becoming a problem child as premiums in exchanges jump double digits.

Interestingly, Ms. Tavenner is a hospital executive, having worked for decades at the Hospital Corporation of America. She has this in common with Joseph Swedish, CEO of Anthem, Inc., now the dominant health plan in AHIP. Both hospitals and health plans are consolidating in the wake of Obamacare, and their relationships will likely become even more strained as health plans form ever narrower networks.

(UnitedHealth Group, the largest health plan in the U.S., quit AHIP last month. It is not yet fully clear what UnitedHealth Group will do differently in public policy and government relations now that it is entirely independent from its industry.)