The health insurance industry’s sudden counterpunch to the Senate version of health reform echoed in Indiana and opened a key issue for the rest of the debate: Will covering half of the country’s uninsured mean raising premiums for the 85 percent of Americans who already have insurance?

The answer is yes, according to a controversial study released Oct. 12 by America’s Health Insurance Plans, a trade group in which Indianapolis-based WellPoint Inc. is a leading member. But the study was blasted by the Obama administration and congressional Democrats as being both flawed and self-serving.

Hillman

In Indianapolis, however, Rob Hillman, president of WellPoint’s Indiana subsidiary, Anthem Blue Cross and Blue Shield, e-mailed the study right away to dozens of Indiana insurance brokers.

Also, Susan Rider, an Indianapolis insurance broker and president-elect of the Indianapolis chapter of the National Association of Health Underwriters, distributed an e-mail with concerns about the so-called Baucus bill, authored by Sen. Max Baucus, D-Mont.

Health insurers’ main beef with recent amendments to the Baucus bill is that the amendments back away from a deal the insurers thought they had—in exchange for health insurers’ agreeing to cover anyone regardless of how sick they are, Congress would require all Americans to buy health insurance.

That mandate would have been enforced through salty fees charged to anyone who didn’t comply. But the fees were heavily criticized, so Baucus’ Senate Finance Committee rolled them back from an original amount of $3,800 to $1,500 for families. And in the first year the amended bill would take effect, Americans would face no penalty at all for going without insurance.

“The penalty for not having insurance coverage is too low, and it will result in many people choosing to just pay the fine rather than purchasing insurance coverage,” Carl McDonald, a health insurance analyst at Oppenheimer & Co., wrote in a recent blog post. He added, “This is a recipe for adverse selection, which will raise premium costs across the entire health care system.”

The AHIP study tried to calculate exactly how much premiums would rise, saying the average family policy would more than double in price in the next decade, to nearly $26,000.

But the study, conducted by PricewaterhouseCoopers, analyzed only four aspects of the Baucus bill. It failed to examine, for example, the $452 billion in subsidies Congress would spend to help uninsured Americans buy health insurance—a potential boon to the industry. Also, since most of the 29 million new customers would be young, healthy and therefore low-spending customers, their presence in insurance risk pools likely would reduce costs for everyone.