One day before a comprehensive health reform bill hits the House floor for debate, one of the insurance industry’s biggest trade groups is voicing its opposition.

In a six-page letter to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner (R-Ohio), America’s Health Insurance Plans said it has numerous concerns with the Affordable Health Care for America Act (HR 3962).

Karen Ignagni

AHIP President Karen Ignagni, on behalf of the organization’s nearly 1,300 member companies, urges the House to “consider alternative approaches to health care reform that do not increase costs or disrupt coverage on which millions of Americans currently rely.”

Among AHIP’s primary concerns is the creation of a government-run insurance plan that would compete with private insurers in newly established health insurance exchanges nationwide.

“We share the concerns that providers, employers, and patients have raised about the significant disruption a new government-run plan would have on the current health care system,” Ignagni writes in the letter. “A new government-run plan would bankrupt hospitals, dismantle employer coverage, exacerbate cost-shifting from Medicare and Medicaid, and ultimately increase the federal deficit.”

She counters that “strong market rules and consumer protections” can ensure that the uninsured get coverage without disrupting coverage for those who seek to keep their current plan.

AHIP also disputes the ability of the U.S. Department of Health and Human Services to negotiate payment rates with providers under the public option, indicating the agency “does not have the infrastructure or capability to do this.

“All health care markets are local and payment rates need to be negotiated at the local level,” Ignagni says. “Lacking the tools and resources to negotiate with providers in every local market across the nation, the secretary ultimately would be forced to resort to imposing some variation of Medicare payment rates on providers participating in the government plan.”

AHIP also expresses its concerns over funding cuts in the Medicare Advantage plan and the impact on the 10 million Americans who rely on this program. The opposition comes as AARP lent its support to the House bill Nov. 5, citing its benefits to its nearly 40 million members, including mechanisms to protect and strengthen the Medicare program.

In the letter, Ignagni also notes how most of the provisions in the bill take effect in 2013. Others, including new rules for pre-existing conditions, extending COBRA coverage and new benefit mandates, begin in 2010 and therefore disrupting coverage. Add to that, she claims, that many Americans are currently in the open enrollment period, selecting their coverage for 2010.

“Although health plans have already submitted their 2010 rate proposals to state insurance regulators, they would need to refile these rates, creating confusion and uncertainty for consumers,” Ignagni said.

Other concerns by AHIP outlined in the letter include creating instability in rate approval, ignoring cost drivers for medical care and creating duplicative regulations that “will not be transparent to consumers and will only increase the cost of coverage.”