The Lewin Group has released a new report that “examines potential impacts that a public health plan might have in competing for enrollment with the private insurance industry.” The report models “several variations on the public model” but the short conclusion is this: millions of Americans could abandon private insurance and enroll in the new public plan:
- 30% lower premiums in public plan if the public program used Medicare rates of reimbursement.
- 32.0 million Americans would leave private insurance and enroll in a new public plan under limited eligibility rules
- 10.4 million people would switch to the public plan if the new program used private payer reimbursement levels and only offered coverage to small employers, individuals, or the self employed
- 119.1 million Americans would leave private health insurance if the public plan used Medicare payments and was opened to all employers
The 119.1 million number vindicates advocates of the public plan. If the public program relied on Medicare reimbursement rates, it could charge premiums up to 30 percent less than premiums for comparable private coverage. But the political conversation has moved towards a model that establishes a level playing field for private and public insurers and provides a public option to those Americans — individuals, the self-employed and small employers — who currently lack choice.
Still, Lewin’s numbers deserve some healthy scrutiny. The firm assumes that “the public plan would be implemented as part of a health reform program” of greater insurance regulation and access to coverage, but it does not capture the reaction of the market place.
In other words, Lewin assumes that President Obama’s health reforms would eliminate medical underwriting and health status rating; it does not predict how private insurers would react to a new public competitor. Would they offer lower rates, design plans with greater flexibility or create some other incentives to retain customers? Lewin doesn’t say.
The keys here are competition and choice. Conservative critics will surely hijack the study to argue that ‘millions of Americans will lose their health insurance coverage,’ but the reality is much more democratic: if millions of Americans are not satisfied with private insurance and believe that a public option would offer better quality at lower costs, then they will stop rewarding private insurers for providing expensive inferior coverage.
But public opinion surveys also undermine Lewin’s assumptions. While 73 percent of voters support having the choice of a public plan, 80 percent of Americans questioned in a CNN/Opinion Research Corp. survey said “they’re satisfied with the quality of health care they receive.” Ultimately, if we level the playing field and force private insurers to compete with a new public option, Americans will have the choice of enrolling in a new public plan and it will be up to the private insurers to beat the public competition.