New Report Examines Public Plan Option

Main Category: Health Insurance / Medical Insurance
Article Date: 08 Apr 2009 - 0:00 PDT

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A public insurance option for middle-income families would help decrease the number of uninsured U.S. residents, but it also could put private insurance plans out of business, according to a Lewin Group study released Monday, the AP/Seattle Post-Intelligencer reports. Depending on how the plan was configured, public coverage would reduce the number of uninsured by 24 million to 28 million U.S. residents.

The study found that if a public plan -- open to all workers and people seeking coverage on the individual market -- was to pay health care providers at the same rates as Medicare, it would soon have about 131 million beneficiaries, while enrollment in private plans would drop. Lewin Vice President John Sheils said that under that scenario, "The private industry might just fizzle out altogether." A public plan paying Medicare rates would charge monthly premiums for family coverage of about $761, compared with an average of $970 in private plans, according to the study.

Lewin also looked at a hypothetical public plan, also paying Medicare rates, that would be limited to workers at small businesses, people seeking coverage on the individual market and the self-employed. Under these conditions, about 43 million people would enroll in the public option, according to Lewin. However, if this plan were to pay providers rates similar to those paid by private insurers, it would enroll 17 million people, the study found.

Although the study results are dependent on details to be decided by lawmakers, the report "could provide ammunition for critics who say a public plan would move in the direction of government-run medicine," the AP/Post-Intelligencer reports. Sheils said, "Our paper is more or less written as a 'how to' manual." President Obama has not given exact details of a public plan he would support (Alonso-Zaldivar, AP/Seattle Post-Intelligencer, 4/6).

The study is available online.

White House Forum
California Gov. Arnold Schwarzenegger (R) and Washington Gov. Chris Gregoire (D) on Monday co-hosted the last of five White House health care forums, which brought together consumer, labor and health industry groups to discuss health care reform (Williams, AP/San Francisco Chronicle, 4/6). The forum was "billed" as a way to "get public input" on the health care overhaul process, but the invitation-only event "was clearly programmed to showcase the broad goals Obama has said he wants included" in comprehensive health care legislation, the Los Angeles Times reports. Coverage for everyone was "widely touted" at the forum, but "there was no discussion of how to achieve that goal," according to the Los Angeles Times.

Schwarzenegger said, "No one can look at our health care system and say that the system is fair or a good return on what we spend, and this consensus can help us pass significant bipartisan reforms into law" (Girion/Levey, Los Angeles Times, 4/7). He added, "Not acting would be irresponsible. We've got to act and we've got to create the action, and this is the year we have got to do it" (Yamamura, Sacramento Bee, 4/7). Schwarzenegger spoke about his own experience in trying to overhaul the state's health care system last year and said, "Compromise is absolutely the most essential thing" (San Francisco Chronicle, 4/6).

Gregoire said, "Every governor -- Republican or Democrat --- would tell you it's not only a moral imperative, it is an economic imperative" (Baertlein, Reuters, 4/7). The California Nurses Association, Physicians for a National Health Program and other groups held a rally outside the forum in support of a single-payer health care system (Los Angeles Times, 4/7).

Congressional Recess
House Democratic leaders are stressing to their members the importance of taking the initiative in promoting proposed health care reform legislation during the congressional recess. CongressDaily reports that talking points being stressed by Democrats "focus on the urgency of an overhaul for families, businesses and the economy," as well as the needs to control costs, maintain patient choice in insurance plans and doctors, increase quality of care and expand health coverage. House Majority Leader Steny Hoyer's (D-Md.) office is using an online health care overhaul clearinghouse to provide members with up-to-date information and a new e-mail feed called the Daily Dose to share information with the public. Hoyer's office also provided lawmakers with binders about health reform efforts containing information that could be tailored to each district.

Scott Frey, executive director National Committee To Preserve Social Security and Medicare Foundation, said, "During [the] push for health care reform during '94, a lot of the inside Washington, inside-baseball work was done before any push to the public," adding, "Changes like this aren't going to happen without a widespread buy-in from the American people" (Edney, CongressDaily, 4/6).

Editorial
A new public health insurance plan that would "offer consumers greater choice, keep the private plans honest and, one can hope, restrain the relentless growth in health care premiums and underlying medical costs ... seems worth trying," according to a New York Times editorial. It continues, "If crafted correctly, [the public plan] would provide a valuable option for people who don't trust private insurers to have a patient's interest at heart." In addition, such an option would "offer a safe haven should private plans abandon a market, leaving their subscribers stranded," the editorial states, adding, "It would also serve as a competitive yardstick for measuring the performance of private plans."

The editorial states that the "fear" that a public option eventually would "sweep away its private competitors" is "overblown," noting that "[i]nnovative, nimble private plans with well-integrated service systems might outperform any government plan." The editorial concludes, "A new public plan is neither the cornerstone of health care reform nor the death knell of private insurance" and "should be tried as one element of comprehensive reform." If, "over time, a vast majority decides the government plan is superior, so be it," the New York Times writes (New York Times, 4/7).

Opinion Pieces

• Tony Blankley, Washington Times: Obama's claim that his health care plan eventually would save the country money "only make[s] sense in a series of timed policy changes on a path toward near comprehensive federal government regulation and management of health care," Edelman Vice President Blankley writes in a Washington Times opinion piece. He continues, "After first squeezing the private insurance policies by undercutting their offerings with subsidized federal health insurance, the government could then further undercut private insurance by denying the insurers tax deductibility unless they complied with federal health service regulations." Once "almost all Americans would get their health care pursuant to federally regulated systems," Obama could "deliver on his twin pledges to reduce the cost of entitlements and make health care overall contribute to lower deficits," according to Blankley. He writes, "The federal regulators could merely do what the British regulators do: Constantly reduce" payments to health care providers, "[l]imit the availability of medical technology," and "[r]ation available treatment to fit federal budget requirements." The piece concludes, "At that point, Americans will, too late, more fully understand what happens when health care is a 'right' rather than a service purchased by a sturdy, free people in an unfettered free market" (Blankley, Washington Times, 4/7).
  
  
• Ezra Klein, Los Angeles Times: "Long lines" for health care services have come to be "the symbol of all that is to be feared about government-run" health care systems like those in Britain and Canada, but the U.S. has "waiting lines, too. ... We've just managed to hide our lines through clever statistical gimmickry," American Prospect Associate Editor Klein writes in a Los Angeles Times opinion piece. According to Klein, "Britain and Canada have decided that no one will go without, even if some must occasionally wait" for care, while "the U.S. has decided that most of those who can't afford care simply won't get it." Klein writes, "If someone can't afford care, we record their wait time as zero." The piece concludes, "So Americans will continue to brag that no one waits, and Canadians and Britons will continue to brag that no one goes without," while "the French and the Germans and the Japanese and the Swiss and many others will wonder why we insist on choosing between such awful extremes" (Klein, Los Angeles Times, 4/7).
  
  
• Harold Luft, Los Angeles Times: "Rather than positioning government programs to compete with health insurers, a primary concern of private industry," Luft, director of the Palo Alto Medical Foundation Research Institute, proposes "a solution that would allow private insurers to voluntarily buy into an expanded public pool." He continues, "This would enable insurers to partner -- rather than compete -- with a public health care plan." According to Luft, the public plan would "have the scope to offer bundled payments to physicians and hospitals that volunteer to come together and provide high-quality care to their patients" and cover chronic illness care. "Private plans can offer products that cover both" chronic illness care and minor acute care, "and behind the scenes they could buy reinsurance coverage from the public pool for the chronic illnesses of their enrollees," Luft writes, adding, "In this way, the public plan would do what it does well -- pool risk and pay for inpatient care" and the "private sector can reduce costs -- not by constraining fees but by developing innovations in care." Luft concludes that "bold new thinking is needed to achieve real reform. Every avenue needs to be explored, not just the same ideas and arguments that have held the nation back from achieving universal coverage, cost containment and improved quality" (Luft, Los Angeles Times, 4/6).
  
  
• Mark McClellan/Alice Rivlin, McClatchy: "[R]eforming our health care system is essential and urgent," but "even if reforms succeed in making a system of high-quality health care available to all Americans, it will fix only a small part of our nation's health problem," Commission to Build a Healthier America co-Chairs McClellan, a former CMS director and director of the Engelberg Center for Health Care Reform, and Rivlin, a senior fellow at the Brookings Institution, write in an opinion piece. "To get large improvements in health, and to address the big gaps in health across neighborhoods and socioeconomic groups, everyone in America must take responsibility for healthy decisions for themselves and their families," according to the authors. McClellan and Rivlin write that "people and programs across the United States have found effective ways to reduce other obstacles to healthy choices," adding that successful programs "have similar characteristics: collaboration, leadership, local adaptability, accountability and continuity in funding." Because there "is no one-size-fits-all solution, proven successes must be shared among similar communities, workplaces, schools and families," they write, adding, "Public and private leadership is required to implement these proven pathways to better health" (McClellan/Rivlin, McClatchy, 4/6).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

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