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.