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Public Option will lead to a Single Payer System

FYI | The House Plan Forces 114 Million Americans Out of Their Current Health Coverage     Goodman Blog, Jul 2009

A Lewin Group analysis of the House health reform bill finds that 2 out of 3 Americans will lose their current health coverage:

114 million Americans would be forced out of their current private health coverage, including more than 106 million Americans who currently have employer-provided health care. There will be substantial cost shifting to private health plans. The "public" plan will significantly underpay health care providers, generally compensating them at rates 20-30% below what private health plans would pay for the same services. As a result, physicians and hospitals would be forced to charge those with private insurance more in order to offset the losses they experience under the Democrats' government-run plan.

A December Milliman Group study found current Medicare and Medicaid underpayments drive up the cost of private coverage for the average family of four by $1,788. The Lewin Group study estimates that a government-run plan that pays Medicare-based rates would increase the cost shift to $3,628.

Medicaid enrollment will increase by 16 million. Many of those newly enrolled would previously have had employer-provided health care.

Excerpt from the Lewin study, referenced above:      June 2009

Summary and Introduction The House bill includes a public plan as part of a broad health reform proposal that would expand health insurance coverage. The program expands increases Medicaid eligibility to 133 percent of the federal poverty level (FPL) and provides individual subsidies for the purchase of insurance for people between 133 percent and 400 percent of the FPL.

Tax credits are available to small employers who purchase coverage, while larger employers are also required to contribute to the cost of coverage for workers. Individuals who do not have coverage would be fined 2.0 percent of their income up to the national average premium amount.

The bill would permit individuals and employers to purchase health insurance from a newly created “public plan” modeled on Medicare. The public plan would compete for enrollment with private insurers in a newly formed network of “exchanges” that present a selection of competing health plans to consumers.

The public plan would be required to follow the same rules concerning pre-existing conditions and premium rating practices that apply to private plans. We estimate that the public plan under the House bill would have premiums that are 20 percent to 25 percent less than for comparable private coverage. The bill specifies that the program would pay providers at Medicare levels, which are 20 percent to 30 percent less than what private plans pay for the same services.

The bill would pay physicians at Medicare levels plus 5 percent if the provider agrees to serve both Medicare and public plan participants. Also, the public plan does not require an allowance for profits and there would be no broker/agent commissions. We estimate that the bill would cover about 24.0 million of the 48.9 million people that we estimate will be uninsured in 2010 (Figure ES-1). Medicaid enrollment would increase by 16.0 million people. If the plan is implemented without a public plan option, the number of people with private insurance coverage would increase by 8.0 million people.

The public plan under the House bill would result in a substantial decline in the number of people with private insurance coverage, even in the early years of the program. In the first year of the program, individuals and firms with fewer than 10 workers are eligible to enroll in the public plan.

We estimate that enrollment in the public plan would be 29,300 people in that year, with a reduction in private coverage of 20,600 people. In the second year, the bill extends eligibility to firms with fewer than 20 workers as well.

Thus, in the second year, private insurance coverage would decline by 30.8 million people. Beginning in the third year, the newly established “Health Choices Commissioner” would be permitted to extend eligibility to include all employers. If the plan is opened to individuals and all employers, the number of people in the public plan would rise to 122.9 million people. Private coverage would decline by about 113.5 million people.1