THE BLOG

Poll: 73% of Voters Think Health Care Reform Must Include Choice of a Public Health Insurance Plan

03/10/2009 08:44 am ET | Updated May 25, 2011

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.