Study Says Public Health Insurance Option Would Be Wild Success
Posted on April 7th, 2009 by Jason Rosenbaum in Solutions that Work
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A new study is out today by the Lewin Group, a wholly-owned subsidiary of UnitedHealth Group, on the public health insurance option:
President Barack Obama and many Democrats want to create a government insurance plan to compete with private plans that now cover about 170 million Americans. The issue is major sticking point for Republicans and the insurance industry.
The Lewin study found that if such a plan were open to all employers and individuals, and if it paid doctors and hospitals the same as Medicare, the government plan would quickly grow to 131 million members, while enrollment in private insurance plans would plummet.
"The private insurance industry might just fizzle out altogether," said John Sheils, a Lewin vice president and leading author of the study.
By paying Medicare rates the government plan would be able to set premiums well below what private plans charge. Monthly premiums for family coverage would be $761 in the government plan, compared with an average of $970 in private plans, the study estimated. Employers and individuals would flock to the public plan to cut costs.
Of course, conservatives (like John Sheils of the Lewin Group) will point to this study to show the "horrors" of socialized medicine if President Obama and Congress has their way and institutes a public health insurance option. There's a problem with this analysis, though, as Igor Volsky at Think Progress' Wonk Room points out:
The keys here are competition and choice. Conservative critics will surely hijack the study to argue that ‘millions of Americans will lose their health insurance coverage,’ but the reality is much more democratic: if millions of Americans are not satisfied with private insurance and believe that a public option would offer better quality at lower costs, then they will stop rewarding private insurers for providing expensive inferior coverage.
That bears repeating. No health care reform proposal under consideration would take away consumer choice. We are not talking about single payer here. So if millions end up on the public health insurance plan, it's only because they chose to be on the public health insurance plan.
I can't for the life of me understand why we wouldn't want to offer the people in this country that kind of choice. The insurance industry arguments against a public health insurance plan amount to complaining that a public health insurance option would do the job so much better than they currently do it and would be too popular. I know the insurance industry is just protecting its profits from a strong competitor, but that doesn't mean the American people have to be taken along for the ride.
The New York Times editorial board agrees, endorsing the public health insurance option today:
Many reformers suggest that a public plan be modeled on Medicare. If crafted correctly, it would provide a valuable option for people who don’t trust private insurers to have a patient’s interest at heart and would offer a safe haven should private plans abandon a market, leaving their subscribers stranded. It would also serve as a competitive yardstick for measuring the performance of private plans.
…What many critics seem to fear most is that a new public plan would sweep away its private competitors and evolve over time into a full-fledged single-payer system (sometimes called Medicare for all). No matter how fair the competition between public and private plans might be at the start, they warn that the government would find it irresistible to rig the outcome through its regulatory and pricing powers and its ability, in a pinch, to subsidize the public plan with taxpayers’ money.
That fear seems overblown. Innovative, nimble private plans with well-integrated service systems might outperform any government plan, just as some now outperform Medicare through better coordination of services, stronger preventive care and broader benefits.
A new public plan is neither the cornerstone of health care reform nor the death knell of private insurance. It should be tried as one element of comprehensive reform. If, over time, a vast majority decides the government plan is superior, so be it.
They're right. We Americans deserve a choice, and if we like what the government offers better than what private industry has offered, so be it.
Fortunately, we need not search far for a model "public plan" proposal built around expansion of an employee insurance pool – the “latest” proposition that seems quite promising.
In Connecticut, HB6600, or "SustiNet," just got a favorable report from the state legislature's Public Health Committee and is gaining momentum. SustiNet ensures that the state wisely uses the dollars it is already spending on state employees, HUSKY (for low-income children) and SAGA by uniting them into a large self-insured health plan. It uses this critical mass of insured residents to improve how health care is delivered in our state and to phase in the enrollment of more residents of Connecticut, including: the uninsured; people with unaffordable or inadequate insurance; sole proprietors and other self-employed people; small businesses, municipalities, and non-profit employers; and businesses of any size.
SustiNet was developed with extensive input from all health care stakeholders and with the expertise of Stan Dorn of the Urban Institute and Jonathan Gruber of MIT. They estimate that, when fully operational, SustiNet could save Connecticut employers and employees some $1.7 billion/year (over the status-quo expenditures). It has the support of, among others: the Connecticut Realtor’s Association; the Connecticut State Medical Society; the Connecticut Public Health Association; and Small Businesses for Health Care Reform.
For more information about the bill, you can go to: http://www.healthcare4every1.org/site/PageServer?pagename=learn_thesolution
From the Report: "If Medicare payment levels are used in the public plan, premiums would be up to 30 percent less than premiums for comparable private coverage. On average, the monthly premium in the public plan for a typical benefits package would be $761 per family compared with an average of $970 per family in the private market for the same coverage."
This is why I do not support the public option — how many families can afford even $761 per month? This "option" is just a cheaper version of COBRA. How hard did Progressive Fight for COBRA just to see 80-90% of people not be able to afford COBRA?
This public option is just a distraction from the real fight which is the fight for Single Payer healthcare reform where you don't have to scrap up $761 a month, it is paid for with progressive taxation where rich people pay more into the national healthcare trust then the working poor and the middle class who have not seen income games since 1976.
Single Payer is the only thing that will work.
The public option is only one part of the plan. There would also be subsidies to make sure families can afford to pay the premiums. Both are necessary for reform, and they would both be necessary in a single-payer system, too.
Like most studies in looking at economy of savings, I take with a grain of salt what they say and potential cost savings.
Being a physician, there is lot issues here not addressed including the cost of building an infrastructure to support a public health option, the quality of care it delivers, the vast increased number of physicians and nurses to take care of the uninsured since there is lack of adequate physician supply even for paid insurers today and most physicians today are limiting their hospital based practice.
Most importantly there is no mention of rationing of healthcare to support paying all people. Like most countries there is dual tier level–single payor and private and usually quality goes with the private sector not public. To implement this, they need concentrate on implementing slowly in one or two cities and completing a randomized study the the cost savings and measured quality of care with a private sector as it is. That way we have studies that can validate anything that the Lewin Group says.
Unforutanately Lewin Groups is a lobbying consulting organization for United Healthcare. They have proposed the same things in California, connecticut and other states and I do not see any studies to support the validity of their conclusions by scientific controlled studies.
We are so interested in reforming the healthcare industry because of costs but there has not been any analysis of what the impact would be on our quality of care and what delivery of care will entail.This is a totally simplistic economic analysis mainly from insurance industries based on simple assumptions that since premiums will go down by giving medicare premiums somehow this is better than we have now and that everybody will get equal access to care, better care than the present system without there being some rationing of healthcare. How do they justify a simplistic conclusion is beyond me except that it makes good politics to be on the President's side and makes more business for their consulting firm.