Wendell Potter, former CIGNA executive, makes it clear:

“The Baucus framework is just an absolute joke,” said Potter, Cigna’s former head of corporate communications who has been speaking out against insurance industry practices. “It is an absolute gift to the industry. And if that is what we see in the legislation, (America’s Health Insurance Plans chief) Karen Ignagni will surely get a huge bonus.”

Potter said the proposal would not provide affordable coverage. It gives the industry too much latitude to charge higher premiums based on age and geographic location, fails to mandate employer coverage, and pushes consumers into plans with limited benefits, Potter said.

Private insurers “want to have ‘benefit design flexibility.’ Those are three very worrisome words,” Potter said at a briefing arranged by the Center for American Progress, a liberal think tank. “By being able to have benefit design flexibility, they will be able to design plans that are so limited that more and more people will be in the ranks of the uninsured.”

Here’s why Potter said the framework is nothing but a win for the insurance industry.

No choice of a public health insurance option to provide competition

The framework requires you and me to carry insurance, but it doesn’t give us the choice of a public health insurance option. This means that the framework hands the insurance industry 47 million new customers – the number of uninsured in this country today – without holding them accountable in any way. This would amount to a huge windfall for the insurance industry, something they’re salivating over:

The half-dozen leading overhaul proposals circulating in Congress would require all citizens to have health insurance, which would guarantee insurers tens of millions of new customers — many of whom would get government subsidies to help pay the companies’ premiums.

"It’s a bonanza," said Robert Laszewski, a health insurance executive for 20 years who now tracks reform legislation as president of the consulting firm Health Policy and Strategy Associates Inc.

As the above quote points out, the framework would result in more than just new business, it would amount to a direct transfer of wealth from the taxpayers to the insurance industry in the form of subsidies for low-income people so they can afford private insurance.

Without the choice of a public health insurance option, no additional competition is created, and so there is little reason to believe the insurance industry will lower their prices or abide by regulation in good faith:

Insurers have a thousand ways to get around regulations to deny care and other bad practices. (These bad practices are detailed in this report from Health Care for America Now [pdf].) Regulations are viewed by business in this country as obstacles to be overcome, not rules to be abided by. In even the best regulations, loopholes will be found, enforcement will be spotty, and fines will be chalked up to the cost of doing business. A study by Stuart H. Altman and Marc A. Rodwin of Brandies University concluded that this occurs today.

As an example, the practice of taking away your insurance policy when you become sick so your insurance company doesn’t have to pay for your expensive medical treatment is not allowed. And yet, the insurance companies admitted before Congress earlier this year that the practice is common.

A public health insurance option fixes this problem by providing people a choice. If your insurance company isn’t abiding by the rules, you will be able to take your business to an insurer that will. This will put pressure on all insurers to play by fair rules, and give people an out if the insurers refuse to obey.

Without a public health insurance option, Potter is justified in claiming the framework is nothing more than a bailout to insurance companies.

No affordability protections

The framework does little to protect middle class families from medical bankruptcy, nor does it relieve the burden of crushing health care costs. As Jon Cohn explains:

Total medical expenses, including premiums and out-of-pocket expenses, would be no more than 20 percent of annual income for most of the people profiled in the document. For the poor, it’d be dramatically less. That’s the (relatively) good news.

And the bad news? These figures are all for people in average health. But people end up paying a lot more in out-of-pocket expenses when they have a serious medical issue–whether it’s because of an accident, an acute illness, or a chronic disease. According to my back-of-the-envelope calculations, a family of four making $42,000 a year could owe $9,000 a year in medical expenses if it hit the maximum in out-of-pocket expenses–which is pegged, in the Finance legislation, to deductible levels in Health Savings Accounts. That’s easy to do when one family member gets in an accident, has an acute medical problem, or is dealing with a chronic disease.

A family of four making $78,000 a year could owe $23,000–nearly a third of its income–if it had a member with high medical bills.

On what planet is paying a third of your income to the insurance industry affordable?

As Potter points out, the framework also allows insurers wide latitude to "design benefits," meaning they would continue charging more for less. And because there is no competition from a public health insurance option, there is downward pressure on insurance company prices. These prices are not going down. In fact, if anything, they will only rise. Even for employer-sponsored plans, the most affordable and high-quality of insurance plans you can by, the price rose 5% for workers this year, where inflation went down by 0.7%.

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Wendell Potter knows what he’s talking about after spending years as a insurance company insider. An analysis of the policy confirms his conclusion: The framework is a bailout for insurance companies, propping up their profits with your tax dollars.

The framework is a huge win for the insurance companies, and it’s a loss for you. We’re hoping that Democrats will fix this framework and make it work for you, not the insurance companies. You can help fight back as well. Join our campaign against the insurance industry, because if they win, you lose.

(also posted at the NOW! blog)

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