More Health Care Scare

The study finds that the more like Medicare a public plan is, the cheaper it would be and the more people and businesses it would attract. Medicare reimbursement rates are significantly lower than what private insurers pay health care providers. Conversely, a public plan that was modeled on private insurance – an idea being pushed by Sen. Charles E. Schumer of New York – wouldn't be that enticing and wouldn't cause much of a shift in the way workers are covered. "That's an area you might get 10 to 12 million," moving off private insurance, Sheils says.

Sen. Ted Kennedy, meanwhile, has drafted a health care proposal with a public plan that would pay providers at Medicare rates plus 10 percent. The Lewin Group study didn't specifically look at that option, but it did analyze the effects of a plan paying rates midway between Medicare and private coverage. That would be close to Kennedy's idea. (The Lewin Group study notes that Medicare payments to hospitals are 30 percent less than what private insurers pay and payments to doctors are 20 percent less.) Under the midpoint scenario, the number with private insurance would drop by between 21.5 million and 67.5 million, depending on who would be allowed to buy into the public plan.

Conservatives for Patients' Right's ad doesn't make clear that the government would have to institute the most generous public plan in order to have the estimated 119 million move off of their current plans, according to the study. 

One final point on the Lewin study: The ad may well give some the impression that the 119 million people that are "off their current insurance coverage" are simply losing their insurance plans altogether. That's not the case, as all would still have coverage through their employer, who decided to switch to the cheaper, public alternative.

It's also worth noting that this number comes from one analysis, and some researchers haven't predicted such a damaging effect on the private insurance market from the introduction of a public plan. A 2008 report by the Urban Institute said in general terms: "We think that a public plan would not drive out private competitors. ... Private plans that offer better services and greater access to providers, even at a somewhat higher cost than the public plans, would survive the competition in this environment. It is also conceivable that private plans offering a lower cost option—for example, lower premiums than the public plan, say by exploiting care management innovations, and network and payment rate limitations—could stake out a separate competitive niche in some markets." The authors said there were constraints on the ability of the government to set very low payment rates.

New York Times Didn't Actually Say That
The ad goes on to say the public plan would "leav[e] no choices in health insurance and government in control of your healthcare," while citing the May 5 New York Times. But that's not the Times' analysis of what a public plan would do.

We've seen this type of newspaper endorsement technique before in political ads, where the credibility of a publication is used to bolster the claims. In this case, the Times didn't say that a public plan would leave "government in control of your healthcare." Rather, a May 5 article by reporter Robert Pear said that this was the view held by Republicans and insurance companies.

New York Times, May 5: But insurance companies and Republican lawmakers say a government-run plan could drive private insurers out of business and eventually lead to a single-payer system run by the government.

The article also mentioned a quote from Democratic Rep. Jan Schakowsky of Illinois, who said that a public plan could "put the private insurance industry out of business" because of the public plan's "superiority."

Interestingly, the May 5 article is about Schumer's proposal to make a public plan closely resemble private ones. As Sheils told us, if that type of public plan is established, it would mean 10 million to 12 million wouldn't keep their current insurance, according to Sheils' analysis – not the 119 million figure the ad touts.

Sources
Sheils, John and Randy Haught. "The Cost and Coverage Impacts of a Public Plan: Alternative Design Options." Lewin Group, 6 April 2009.

Pear, Robert. "Schumer Points to a Middle Ground on Government-Run Health Insurance." New York Times, 5 May 2009.

Sheils, John. Interview with FactCheck.org, 11 June 2009.

Holahan, John and Linda Blumberg. "Can a Public Insurance Plan Increase Competition and Lower the Costs of Health Reform?" Urban Institute, 2008.

© 2009