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The health reform plan proposed by President Obama during his campaign assures that consumers can keep the private health insurance plans that they already have. That is important, because it addresses one of the biggest concerns voters have about health care reform.
But voters also want a plan that gives them a choice not only of private health insurance plans - but a public health insurance plan as well. In fact a new poll by Lake Research found that a whopping 73% of voters want everyone to have a choice of private health insurance or a public health insurance plan while only 15% want everyone to have private insurance.
Obama's plan does indeed allow consumers to choose a public health insurance plan similar to Medicare - a plan that does not rely on the giant private health insurance companies that are largely responsible for getting us into the health care mess.
And including a public health insurance option is not just good politics, it is critical if health reform is to succeed in controlling skyrocketing health care costs.
Not surprisingly, the notion of a public health insurance plan makes private health insurers apoplectic. The reason is simple: public health insurance plans can deliver the same health insurance coverage for our citizens for a lot less money. That fact is implicitly recognized by Republican members of the Senate who charged last week that a public health insurance plan would be "unfair competition" to private insurers and feared it would ultimately put them out of business.
Maybe they didn't get the memo. The point of health care reform is to guarantee affordable health insurance coverage to every American - not to benefit the private health insurers and other special interests whose bloated administrative expenses and massive profits have already caused Americans to pay 40% more per capita for health care than citizens of other industrialized countries.
A Public Health Insurance Option is Critical to Controlling Costs
Allowing consumers to have a choice of a public health insurance plan will - as President Obama said Thursday at the Health Care Summit - keeps the private plans honest. A major study by the highly respected Commonwealth Fund concluded that a public health insurance plan could deliver comparable health insurance for at least 20% lower cost than private plans. That means it will directly lower costs. But it will also put competitive pressure on private plans to lower costs and premiums as well.
A public health insurance plan will have the same effect on health insurance premiums that Southwest Airlines has on airfares when it moves into a new market: all competitors lower prices. The rest of the market players have to scramble to figure out how to lower costs and increase efficiency -- that's what a competitive market is supposed to be about.
But like the Wall Street bankers, the private health insurers have grown fat with massive executive salaries, bloated administrative costs, and super-charged profits. They don't want to compete against a more efficient public health insurance plan - it's that simple.
Generally Republicans don't miss a chance to argue that the private sector is more efficient than the government at doing pretty much anything. Pretty ironic then that they want to protect private health insurance companies from competition from a more efficient public health insurance plan.
But if you look at the facts, that shouldn't come as a surprise. Medicare has much lower administrative costs per dollar of payout than any private health insurer. A few years ago, when the Republicans ran Congress and the White House, they set up the so-called "Medicare Advantage" program to allow private insurance companies to take chunks of "Medicare business" that would otherwise be serviced by Medicare. At the time they promised to be "more efficient" and provide "more options." In fact, it turned out that private "Medicare Advantage" plans required a subsidy. Seniors on "Medicare Advantage" plans currently cost the government 114% to 130% more than those in traditional Medicare - a disparity that the Bush Administration allowed to persist and the new Obama budget plans to end.
Of course when you think about it, it should be obvious why public health insurance plans like Medicare are more efficient that private plans. First they benefit from large efficiencies of scale so their administrative costs are far lower per dollar paid for health care. Second, they don't have to generate huge profits. Third, they don't have massive marketing costs that eat up huge sums of every health care dollar. Finally, large public health insurance plans can use their buying power to drive down costs of pharmaceuticals and other health care suppliers.
For example, in 2007, the profits of the top five health insurers amounted to a whopping 6% of every dollar in their premiums. Public insurance plans don't have to pay profit to stockholders.
That same year the CEO of Cigna Insurance - one of the top five health care insurers - was paid $22.7 million. Remember that the top executive in the Federal Government - the President of the United States - only earns $400,000 -- $22.3 million less.
In an article analyzing why the U.S. pays 40% more per capita on health care than comparable countries, Uwe E. Reinhardt, an economist at Princeton, points out that:
"The McKinsey Global Institute estimated that excess spending on "health administration and insurance" accounted for as much as 21 percent of the estimated total excess spending ($477 billion in 2003). Brought forward, that 21 percent of excess spending on administration would amount to about $120 billion in 2006 and about $150 billion in 2008. It would have been more than enough to finance universal health insurance this year."
And of course the buying power of public health insurance programs in Europe, Canada and other industrial countries is one of the reasons why consumers and taxpayers in those countries pay half as much as we do for many pharmaceuticals.
The private sector can do many things more efficiently than the Federal Government, but providing insurance is not one of them. Federal programs like Social Security, Social Security Disability, and Medicare are much more efficient than private sector insurance programs. In fact, experience around the world shows that governmental institutions are simply better suited to provide social insurance than competing private companies. That's one of the reasons why health insurance premiums in the U.S. have risen more than four times faster than wages over the last decade.
The bottom line is that America's taxpayers, health care consumers - and our economy - should not be required to rely exclusively on bloated, inefficient, profit-driven private insurance companies. They should have a choice of a more efficient public health insurance plan. Such a plan will cut overall health care expenditures directly by being more efficient, and it will rein in private health insurance company costs and prices by providing competition.
Allowing Consumers to Choose between Public and Private Health Insurance Plans is Good Politics.
Not only does the poll by Lake Research show that 73% of voters want everyone to have a choice of private health insurance or a public health insurance plan -- the preference for a choice of public and private health insurance plans extends across all demographic and partisan groups, including Democrats (77%), Independents (79%) and Republicans (63%).
What's more, this support holds up even after they are delivered a battery of industry attacks. After hearing all of these attacks and responses, overall support for a choice of public or private health insurance plans remains firm at 72%,
Voters understand that a public health insurance plan will lower costs by providing real competition with private insurance while spending less on profits and administration (62%), while only 28% agree with the attack that a public health insurance plan will be a big, costly government bureaucracy.
Over the months ahead, the special interests will do everything they can to cut this indispensable heart out of the Obama health reform plan. The broad progressive health care campaign, Health Care for America Now, is mobilizing to defend the Obama Plan and its public health insurance option. It is critical that Congress and the voters make it clear that this time, the profits of special interests like the insurance industry and drug companies won't be allowed to trump the public interest. This time the stakes are simply too high.
Robert Creamer is a long time political organizer and strategist and author of the recent book: Stand Up Straight: How Progressives Can Win, available on Amazon.com.
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The public is ready for a single payer system. It's only the politicians (both sides of the aisle) who are not.
Yes, it should include a choice.
Ultimately, if not this first attempt, we will need to find a better source of revenue to pay for these plans, public or private. A value added tax on all goods and services, excluding food and heathcare, but importantly including imported goods and services will be the best way to pay for healtcare, and will have the added benefit of making goods and services produced in the U.S. more competitive with those imported.
Healthcare has become a tax on U.S. labor -- it has become a major reason U.S. labor is uncompetitive with countries that either have no healtcare or it is paid by the govt.
Let the consumption tax pay for a basic health care plan for everyone. Give a credit to those that want a private plan. The consumption tax takes a burden off labor, making goods and services produced here more competitive with imported goods (as they are paying the same cost of healhcare as U.S produced goods and services). If we need to give a tax credit to lower income people, then that can be used to make it less regressive.
Why not just do it now?
In the UK everbody pays into the National Health Service NHS through their National Insurance, every body has right to Health care free at the point of delivery, you get to see your docctor when you need to, medication is provided free of charge for those over 60 and for those with long-term illnesses or on welfare benefit, otherwise you pay a small set charge for each presciptionand if hopsitalised there are no financial worries or any paperwork - it is taken care of. If you want to go for a private scheme then you can but there is no opting out of the National Health Service. The advantages are that you are set free from the financial worry of any illness, you are not reliant upon your employer for provision of health care. The State Health and social care services service are excellent in my opinion in the UK.
However its paid for, we need to destroy the link between the cost of health care and the cost of labor. It is now killing the competitiveness of our country's labor.
Private healthcare
I have two friends, cancer surivors, who were will two different insurance companies (private).
Amen. Those plans are the worst on the consumer.
I've been a Kaiser baby for a long time.
Love it.
A lot of people want that huge flexibility, but I couldn't make heads or tails out of many of those private options,either.
Why would corporations even want to deal with healthcare insurance??? Don't they want that monkey off their back? One would think they would be pushing for universal healthcare. Then they can compete with the rest of the world in labor costs.
thats a really good question and one that I was asking myself after I saw the CEO of the chamber of commerce on tv this past Sunday. They are going to spend a lot of money to bury the pubic option
The best and most moral aspect of a Medicare-style plan is that it covers everyone but at rates linked to their income, not to the market. Mandates to purchase a commodity (insurance) in the largely unregulated market are not only obscene and immoral but without precedent. Might as well insist the answer to homelessness is mandated purchase of a house. If you could, you would. Medicare definitely has a mandate, but the payment fluctuates as your income and life circumstances do, and it goes with you everywhere. Even though I have private insurance, it would be superb to have something not tied to my job that I could lose. Let private insurance, as it does for Medicare, pick up optional stuff, but let us have a great public plan that covers prevention and sickness and a decent pharmaceutical plan (NOT Part D!) We can do this, save a ton of money for ourselves and the nation, and finally cover everyone. Health is a moral responsibility of each and all of us to one another which we need to preserve for the Common Good. Now we can!
At last an intelligent post that discusses the huge profits and salaries in the Health Care Industry. They do indeed rival Wall Street in their greed and lack of ethics. I am sure as this debate heats up further we will her much more about this issue.
Ah, so he's going to kill the alternate medicare plans that allowed seniors to keep their own doctors, huh?
Thanks for the update.
That will be horribly unpopular.
From a pure business perspective, I think that "insurance cannot work if there is a vast body of UNinsureds
I have a friend who is an attorney, for pete's sake. His wife's going to have a baby! Good news? No. There's no insurance, and that bambino is now a "pre-existing condition.
That's no way to run a health care system; no way to run a hospital or a doctor's practice. Huge amounts of money are spent just collecting money. Those who can pay are charged too much, for every procedure that can be pushed through, to pay for those who cannot. Are we to say in America that "the rich will live and the 'poor' (sic...) shall die?" If that be so, why does that number include someone who makes over $100,000 a year and who just had what ought to be a joyous, even miraculous surprise?
HR676 HR676 HR676 HR676 HR676
Yes indeed, but Obama's plan might actually be easier - no new bureaucracy, just slide us all into Medicare. But without HR 676, we would not be having this conversation! Go single payer!
In all of this discussion about cost, where is the discussion of quality of care?
The French have the highest rated healthcare system among industrialized countries because they are concerned about wellness and prevention. And in France, you have the choice between private and public insurance. If you opt for private, you pay the freight. If you opt for public, you pay a percentage of income above a certain floor. And even if you opt for public, you can buy 'top up' or supplemental insurance to cover what the public system doesn't and to pick up the copays.
So what happens when the French are given the choice? Surprise! They pick public over private.
I support a three-tier health care financing system with a pyramidal shape. The base would be guaranteed public insurance. The middle level would be whatever employment based coverage remains available. (This will disappear quickly--see below). The top would be any special procedures, top level "executive" perks, "enhancements," and other such options that are purchased out of pocket. To create a fair environment the tax deduction for employers will go.
Why does it need to be any different from what Medicare is now? Two-tier: basic coverage (can be made a LOT better) that handles most everything with options for private coverage for whatever remains. Many people cannot afford the private insurance, but their health care coverage is excellent. The only problem with 'executive' insurance is the pressure that will come from the RW and insurance industry to make public coverage really bad so people will long to return to the 'benefits' of private coverage. Le't make this really work for everyone!
Public health insurance should be achieved by a merger of Medicare and Medicaid, financed with income taxes. Eligibility should be assured up to 350% of poverty and age 55 and up. Anyone should be able to buy in. We can use an existing administrative system (Medicare) and unburden the states from the cost of Medicaid. Win:win. As an essential feature of this program the financing of Medicare must shift from the woefully inadequate flat payroll tax and a hodge-podge of fees and premiums. Failure to shift the financing to income taxes assures multi-trillion dollar deficits (probably over $40 trillion) over the next thirty years. Rest assured the born-again fiscally conservative Republicans (or whatever party of dinosaurs replaces them) will use the unfunded liabilities of Medicare as an excuse to undermine universal coverage. BTW, I would require all public employees-
Very thoughtful and spot on.
I think it would be better to merge Medicare, Medicaid, SCHIP, VA, etc. into one system in which everyone may participate regardless of age, regardless of income. The more we share our inclusiveness, the better for all of us. Even those of us with private insurance understand how risky it is =- lose a job, lose a spouse, lose insurance. We all need access to affordable, income-based health care, not just insurance. A fully open public plan would help so many people and do so much good! No need to set limits. Unemployed CEOs might find it quite useful!
SCHIP would fold in as part of Medicaid. The VA should remain separate as it is an icon of the success of socialized medicine. Besides, the troops should get special attention.
Why doesn't the state and federal government address the disparity between the kind of insurance coverage that public employees are receiving, as compared to the private sector and how these skyrocketing costs have become excessively prohibitive for wage earners to keep up with in some states, where the taxes are compounded at the county, and town levels in addition to taxes at state levels that require the private sector to bear the brunt of taxes for public servants, for health care plans that are completely out of sync with what the private sector can even dream of affording for themselves or their own families.
Where are the legislators addressing the needs and the concerns of the private sector that can barely afford saving for their own families, who at the same time are being taxed repeatedly at multiple levels ( city, town, county, state) to cover health care costs for public servants? Where are state and federal officials in reigning in these costs burdens on the private sector? Why isn't the health care costs and coverage in the private sector comparable to what the public sector is enjoying? Why the disparity? How is this just?
Where is the representation for the private sector in the discussion about health care?
If the public plan is good, then why doesn't the government propose it for all publicly funded health care packages for public service employees?
Part of the issue for businesses concerning health care costs revolve around the disparity existing between the packages being afforded to state and federal employees vs. what the private sector can afford in providing health care coverage to employees. Costs for health care in the private sector have become increasingly more difficult for businesses to keep up with - as compared to what federal and state employees enjoy through funds collected in taxes paid by the general public.
We want good health care packages for our public servants, but the disparity that currently exists between the public and private sectors in terms of costs and coverage is simply unjust, and unfair, and is not being addressed in the discussions on this issue.
It is not just businesses being impacted by these costs.
Citizens paying taxes across America are already deeply impacted by an economy that has resulted in families losing retirement savings, while workers are being taxed to support excessive health care costs for public employees - that non-public employees cannot even afford to save for themselves, yet the public is being taxed to provide skyrocketing provisions for those working in the public sector, while families in the private sector are facing circumstances that leave them having to start all over again in trying to save for retirement. That seems egregiously unfair and unjust.
The best thing they could do is expand Medicare so that people who are not retired will at least have the chance of getting on it.
It goes without saying that the Republicans, and some "Democrats" regard it as their mission in life to protect private insurance companies and big business in general, but that should never be the purpose of the REAL Democratic Party. I have never liked this idea of private health insurance companies raking in billions more in government subsidies, and then jacking up the prices to suit themselves.
You can bet no one will be regulating them, so it's better just to expand teh public sector--and not only in this area.
I have said from the start that if we have to use direct money transfers and subsidies from the Federal Reserve system to save Social Security and Medicare, then we should just do it. It is an unanswerable argument that if banks and big corporations are getting trillions from the Federal reserve, then it can also help us out with our unfunded entitlement programs.
Michael C. McHugh
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