In The Public Interest: We Need Wyden's Free Choice Amendment for Effective Health Care Reform

The following is my open letter to Senator Ron Wyden of Oregon from the U.S. Public Interest Research Group endorsing his Health Care Free Choice Amendment, which contains proposals necessary for effective health care reform that guarantees an array of affordable insurance exchange options for all Americans.

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Dear Senator Wyden,

U.S. Public Interest Research Group (U.S. PIRG) and our affiliates, the State Public Interest Research Groups, have a thirty-five year history of standing up for consumers and taxpayers against powerful special interests. Throughout this year's health care reform debate, U.S. PIRG has advocated for policies that would offer consumers better choices and lower health care costs. Consistent with our history and priorities, I write to you today to express U.S. PIRG's support for your "Free Choice" proposal.

As you know, a central feature of the health reform legislation now before Congress is the creation of health insurance marketplaces called exchanges. By allowing enrollees to pool their bargaining power and purchase health insurance coverage in large, well-regulated markets, these exchanges will allow consumers to get their coverage at a lower cost than they would on their own. Also, by offering an array of high-quality choices too frequently absent from today's insurance marketplace, exchanges will help lower costs by fostering competition in health insurance coverage. Finally, the exchanges offer a strong mechanism for portability, since enrollees' coverage would not necessarily change when they leave their existing job or start a new one.

Unfortunately, the existing health reform bills confine participation in these exchanges to individuals, employees of small businesses that opt to provide coverage through an exchange, and those workers whose employer does not offer creditable, affordable coverage. Employees of small businesses that offer their own creditable health coverage plans and most employees at larger firms would continue to receive only the options offered by their employers.

By progressively opening up the exchanges and allowing employees to opt into their employers' plan or, alternatively, take their pick of any of the offerings on the exchanges, your Free Choice plan will greatly expand the coverage options available to Americans with employer-provided coverage. Your proposal will dramatically increase the number of Americans who are able to choose a plan that fits their needs. Allowing an employer's contribution to follow an employee via a voucher will ensure that employees' choices will not be overly constrained.

In addition to expanding choices for consumers, your Free Choice proposal would make other significant improvements to the effectiveness of the broader health reform legislation:

• Widening exchange eligibility will help these employees purchase portable insurance coverage that can stay with them through employment changes.
• A larger number of individuals participating in the exchanges will enhance bargaining power and generate greater risk-pooling, thereby leading to lower premiums for all exchange participants.
• By expanding the number of Americans receiving coverage through the exchange, your proposal would expand the number of Americans who would have access to any proposed public plan. The added economies of scale and market power would make the public option an even stronger competitor to private insurers, driving down costs for all consumers.

As your proposal acknowledges, opening up more choices does create a risk of adverse selection, if a disproportionate share of sick employees decided to opt either for exchange or employer coverage and thereby drove up premiums. Commendably, the Free Choice proposal mitigates against this risk by creating a reinsurance mechanism to protect businesses and insurers that may experience higher-cost risk pools. As you move forward with your proposal, we urge you to ensure that this important policy element remains adequate to its task.

On behalf of U.S. PIRG's members and affiliates, I thank you for your leadership on this important issue and look forward to working with you and your office to ensure that your Free Choice proposal takes its place in the final health reform legislation.

Sincerely,

Larry McNeely
Health Care Advocate

 

Follow Larry McNeely on Twitter: www.twitter.com/LarryPIRG

Comments

[dwmulenex]

09:19 AM on 10/21/2009

Well functionin­g markets require competitio­n and consumers need choices to keep costs in line. When 94 percent of insurance markets are noncompeti­tive and two thirds vitrual monopolies­, competitio­n doesn't exist. It wasn't so long ago-- 1999--- that Blue Cross was a not for profit company. When it went private, it used a market dominant position to jack up rates more than 100 percent. the We might ask what our rates would be today if Blue Cross hadn't jumped for profits. Wyden's proposal is no panacea. One problem in the health debate is that Democrats don't want to tell us the total health care costs we will face under reform. Will it be $2 trillion, $1.8 trillion, or $1.4 trillion? Exactly what is the right amount for average $75,000 a year families to pay? Is it 10 percent of income, or more? Democrats need to provide a public option available to all before they impose a individual mandate, and they need to give all health insurers a strong Rx to limit administra­tive costs and impose a minimum ratio of 90 percent of premiums collected paid in care. But let's be clear: when our per capita health costs are already in the $8,000 a year range, we will not provide health care to those families earning $50,000 or less without a $3,000 a year subsidy for every family member, even if we require them to pay an unrealisti­c 20 percent of their income in insurance.

[DragonMama]

12:01 PM on 10/21/2009

$75k/yr is NOT "average" - it is well above average. From a US Census's press release:

"In the 2007 ACS, median household income ranged from $68,080 for Maryland to $36,338 for Mississipp­i. (The median income for Mississipp­i was not significan­tly different from that for West Virginia.)­"

http://www­.census.go­v/Press-Re­lease/www/­releases/a­rchives/in­come_wealt­h/012528.h­tml

Most working-cl­ass and "median income" families can't afford to even hit the 7% mark required to claim their medical bills as an exemption without suffering serious sacrifices in other areas, such as food quality, shelter, or child care - particular­ly when you factor in the several hundred dollars per month many folks in their late 20s and early (or even mid) 30s are paying in outstandin­g student loan debt that was *supposed* to increase our earning power.

[fredamae]

08:54 AM on 10/20/2009

The ONLY Real Solution to this debate is to in effect; Neuter the Insurance Industrial Complex, once and for all.

Too Big to fail? Too Bad.

The Monies we pay into this "Extortion Ring" Would be Freed up and Invested into plans that Actually Deliver Services When Needed!

People are tired of being forced to "Sleep with the Enemy".

No one seems to Really want Regulation and Even if they Did, Even If it Happened, It would be Mandated in such a way that it would Benefit The Ins. Industrial Complex Instead of the People who Pay for Services that Are Not There When Needed....
Seems the current System resembles Extortion.­.Ins Reform attempts to Mandate our Participat­ion in this "Program".

[Billl]

12:09 AM on 10/20/2009

“PIRG has advocated for policies that would offer consumers better choices and lower health care costs.”

Please compare this plan to anything being offerd by anyone.

We must have lower cost alternativ­es to insurance funding and lower cost alternativ­es to current hospitals and health care delivery systems or meaningful reform will not be possible.

If the President and legislator­s would allow a CBO study compairing a dual public/pri­vate system to any other health reform, that study will scream for us to start over.

Providing health care efficientl­y saves lives and saves money.

Nobody can collect the money to pay for health care as cheaply as the government can through a national sales tax, and nobody can deliver high quality care and medication­s as cost effectivel­y as the VA.

Two choices should be offered to everyone to use either; free public health care, sales tax funded, from a new system of government owned and operated hospitals, using the VA format, that would deliver all government funded care, or alternativ­ely to use privately purchased private care.

Employers or state and local government­s who select federal public care for their employees would not be required to pay for health care.

Let’s compare this common sense dual system that would allow unlimited choices while saving taxpayers hundreds of billions annually, and always free public care would be available, to the reforms being proposed by Mr. Baucus’s legislatio­n, or anything else being proposed by anyone from the President down.

[jpmccn]

01:56 PM on 10/21/2009

Health Co-ops would make more sense than most of these other choices being offered.

[lemonyashes]

04:33 AM on 10/22/2009

Oh my! Where have you been? we are long off the healthcare co-ops as their effectiven­ess is "unknown" and what was known wasn't good.

[smileatfear]

06:29 PM on 10/19/2009

Ron Wyden is my senator and I've watched his plan closely. You guys are all wrong on this one, and so is Ron Wyden. This would do to health insurance benefits what 401(k)s did to pensions. Companies can now bargain for insurance based on having large pools of people and threatenin­g to take their business elsewhere and still the cost of insurance, even in these large pools is exorbinant­. Having every individual out in the market trying to find the best plan will do nothing to lower cost, especially if insurance companies are mandated to take everyone. It did nothing to contain costs in Massachuss­ettes. Ron Wyden's plan would be a huge boon to the insurance industry by mandating that everyone buy insurance from a private insurance company and it would encourage companies that now pay a large portion of their employees health coverage to instead provide a small stipend and let the employee struggle to find an affordable plan. Those with a good plan from their employer would be penalized by having to pay taxes on the plan and those without an employer-p­rovided plan would be penalized if they couldn't afford to buy a plan on their own. How do you think all those single moms working for Wal-Mart are going to buy insurance? Single payer or a viable public option that is open to all are the only fair solutions.

[fredamae]

07:59 PM on 10/19/2009

Why not just do All three? Lots of choices available then.

[xlntcat]

05:08 AM on 10/21/2009

You are making a broad assumption and misunderst­anding what Wyden is trying to achieve. The only individual­s who would be likely to take advantage of the exchanges are the ones who have inadequate plans through their employer. Companies cannnot bargain for better rates any more because the health insurance megamonopo­lies bought up their competitio­n and colluded with one another and with the states so that they are the only show in town. If you think Wyden's plan would in anyway benefit the insurance industry, you must be a shill of the insurance industry.

[TJCole]

06:19 PM on 10/19/2009

Agreed, but as long as our government is run by corrupt bribe taking shills for the Insurance Industry like Max Baucus what good does it do...?

What we need is a functionin­g Single Payer Health Care System..!

[smileatfear]

06:30 PM on 10/19/2009

Max Baucus is hardly the worst of them.