After months of publicly supporting health care reform, America’s Health Insurance Plans –- the lobbying arm of the health insurance industry – issued an inflammatory report warning Congress that the Senate Finance Committee’s health care bill would increase health care costs. But a quick read of the analysis reveals the report for what it really is: the best argument yet for why reform must include a public option.

Critics have argued that the report is a skewed analysis that doesn’t consider the totality of reform. As the Senate Finance Committee points out, the industry-backed analysis “has not taken many of the reform provisions into consideration in reaching its numbers.” “These other reform provisions would have the opposite effect and lead to lower premiums – but those provisions were ignored,” the committee wrote in a memo criticizing the report. The actual report admits as much on page eight. “The reform packages under consideration have other provisions that we have not included in this analysis,” the study says. “We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.”

According to the Congressional Budget Office, some reform provisions would tend to make premiums higher than under current law; other provisions would “tend to make them lower.” Americans from different income brackets will pay different amounts for health care, but on the whole, premiums in the exchange would be lower than they are in the nongroup market today. As MIT economist’s Jonathan Gruber’s analysis of CBO data points out, young people, older individuals, and families would all see savings under the current bill.

That said, the Senate Finance bill must do more to control health care spending and lower premiums in the private market. After all, Congress shouldn’t force Americans to purchase coverage from an industry that has just admitted that it would increase premiums by some 111% if reform passes. As Rep. Anthony Weiner, D-N.Y., pointed out, “if you have the health care industry complaining that we’re going to raise costs because of these changes, it is them putting us on notice that we haven’t put enough cost containment in the bill.” “That should be a tell to the Baucus team that you know what, maybe it’s time for them to go back and revisit the public option.” Indeed, the Congressional Budget Office has concluded that a robust public option could save up to $150 billion over 10 years and lower premiums by 10%. Most importantly, it would inject competition into concentrated insurance markets and help keep private insurers honest.

“It’s a powerful argument, frankly, for why we ought to have a public plan and it’s a powerful argument for the attitude of an industry towards this effort,” Sen. John Kerry, D-Mass., said yesterday before the Finance committee reported its bill out of committee, suggesting that if the AHIP report pushes Democrats to vote for a public plan, it may prove relevant after all.

Igor Volsky is a health care researcher at the Center for American Progress and the co-author of the book, Howard Dean’s Prescription For Real Health Care Reform. He blogs daily about health care reform at the

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