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AHIP Explains Its Opposition To The Public Plan

By Igor Volsky  

"AHIP Explains Its Opposition To The Public Plan"

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America’s Health Insurance Plans (AHIP) — the insurance industry’s lobbying arm — is hosting a health care policy forum in Washington D.C. This is the second of a series of posts from inside the conference.

When ThinkProgress asked AHIP spokesperson Robert Zirkelbach about the lobby’s opposition to a public plan, Zirkelbach explained that the insurance lobby was concerned the the “government-run program” (as he called it) would undermine health care providers, employers, and the “sustainability” of the entire health care system”:

- Impact on providers: “Public programs pay less than their costs and those costs are being passed through the health care system and it’s ultimately employers and consumers who are footing the bill.”

- Impact on the employer community: “This could cause many people to leave the employer market and enroll in a government-run plan. This is something employers have expressed concern.”

- Sustainability of our current health care system: “Medicare actuaries say that the Medicare system is going to start running deficits as soon as 2017. We have to make sure we’re using our public resources as responsibly as we can — as we can. We believe in a public program”

Watch it:

A public plan would actually alleviate AHIP’s “concerns” about runaway health care costs and running deficits. As Harold Pollack argues rather succinctly over at The Treatment, “experience suggests that effective public programs provide high-quality, cost-effective care” and it would “have greater leverage in encouraging standardized quality improvement strategies and electronic medical records.”

A public option could reduce projected health care costs by about “$2 trillion over 11 years, and lower premiums by about 20% on average.” Within a decade, 105 million people would be enrolled in the public plan, and about 107 million would have private insurance.

But brush AHIP’s objections aside, and their real concern is sacrificing profits to competition. Medical loss ratios, an indicator of how much revenue insurance companies spend on care vs. how much they keep as profits, have dropped precipitously in the last decade. Forcing private insurers to “shave-off” some administrative costs and compete with a public option may very well reverse that trend.

For policy makers, this is really an argument about the proper role of government. As Dean Baker argues, “some people, who tend to be left of center, think that the government’s role is to try to promote the general good, by providing basic services, protecting the poor and the sick, and ensuring a well-working economy. On the other hand, there are others, who usually place themselves right of center, who believe that the proper role of government is to redistribute as much income as possible to the wealthy. These competing views of government are coming to a head in the debate over national health care reform.”

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