President Obama recently
announced his three "bedrock requirements" for real health care
reform, and issued a
call to action for support of these requirements. The bedrock
requirements for the president are:
Reduce Costs -
Rising health care and coverage costs are crushing the budgets
of governments, businesses, individuals and families and they
must be brought under control
- Americans must have the freedom to keep whatever doctor and
health care plan they have, or to select a new doctor or health
care plan if they choose
Care for All - All Americans must have quality and
affordable health care
Center for Medicare Advocacy (the Center) also released a call for
health care reform – and for support of a public plan option.
Health care advocacy groups like the Center support a public plan
precisely because they know that is what really fulfills the
president's three key requirements for reform.
Public Plan Reduces Costs
public plan offers significant savings in administrative costs,
savings that private plans have been unable to match. Currently 31%
of health spending is spent on administration rather than invested
in patient care.[i]
Over $350 billion could be saved with simplified single-payer
addition, because of the broad reach of a public plan, it would be
able to negotiate lower volume discounts from providers and drug
manufacturers. This would save overall costs to the public plan.
Lower (but not too low) payments must be met by greater efficiency.
While some argue that these lower payments require higher payments
from other insurance plans, the evidence demonstrates that higher
payments – those often negotiated by private plans - are not caused
by lower payments from a public plan. Instead, higher "costs"
reported by providers are associated with higher payments.[iii]
Provider efficiency, therefore, leads to lower costs for all
Finally, a public plan
does not earn profits and has no imperative to do so, as private
plans do. This allows a public plan to offer lower premiums.
Estimates are that premiums in a public plan would be 20-30% lower
than those of private plans.[iv]
Lower premiums are better for the individuals who would be required
to pay them, and for the governments or employers who, depending
upon the design of the reform package might be called upon to pay
premiums on behalf of others.
Public Plan Guarantees Choice
a fragmented system of private plans with limited geographic reach
and provider networks, a public plan, like Medicare, would be
available to anyone, anywhere in the country. This lets
beneficiaries stay with the health care providers they have chosen,
and to choose their providers in the future, rather than being
forced into a limited network of participating providers. This
choice – of doctors and other health care providers – is the choice
that really matters to people.
public plan would not limit participants to obtaining health care
coverage, and care, in a particular geographic area, but rather
would allow beneficiaries to be cared for by participating doctors,
specialists and facilities nationwide. Again, this is like the
traditional, public Medicare program that allows people to obtain
care from doctors, hospitals, and other care providers throughout
the country. As in traditional Medicare, nobody in a public plan
would be denied coverage for being "out-of-area" or
"out-of-network," as so often happens with private plans.
public plan option IS a key to real health care reform. A public
plan option would let people choose a stable, well-defined benefit.
Proponents of choice should support offering a public plan, too; not
just private plans. To do otherwise is to LIMIT people's options.
Public Plan Ensures Quality Care for All
A public plan for health
care would be nationally available to all. It would have a defined
set of benefits. There would be no surprises regarding what is or
isn't covered – or where. Those who participate in the country's
current public plan, Medicare, know this and, as a result, are very
satisfied with the quality of their coverage. The AARP has found
that 80% of people with Medicare are either "extremely" or "very
satisfied" with their health care coverage and with access to their
physicians. This is a higher rate than that for 50 to 64 year olds
with private insurance.[v]
There is no reason to believe that a public plan, as part of
national health care reform, would not fair equally as well as
Medicare does with customer satisfaction.
Learn from Medicare:
Support real health care reform; support a public plan!
Administrative cost of Medicare at approximately 2% and
private insurance at approximately 19%
[ii] Physicians for
a National Health Program, "Financing Single Payer National
health Insurance: Myths and facts",
[iv] Hacker, J.,
"Healthy Competition: How To Structure Public Health
Insurance Plan Choice to Ensure Risk-Sharing, Cost-Control,
and Quality Improvement", supra., [citing The Lewin Group,
"Cost Impact Analysis for the 'Health Care For America'
Proposal," February 15, 2008.
Accessed April 7, 2009,
Davis, "Public Programs:
Critical Building Blocks in Health Reform," Testimony before
the Senate Finance Committee, June 16, 2008.]