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ALJ/MAC Decision Database


Want real health care reform?  support a Public Plan Option!

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:

  1. 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

  2. Guarantee Choice - 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

  3. Ensure Quality Care for All - All Americans must have quality and affordable health care

The 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.


A Public Plan Reduces Costs


A 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 administration.[ii]


In 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 insurers.


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.


A Public Plan Guarantees Choice


Unlike 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.


Also, a 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.


A 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.


A 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!


[i] Compare: 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",

[iii] Medicare Payment Advisory Commission (MedPAC), "Report to Congress: Medicare Payment Policy" (March, 2009), available at

[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,; Karen Davis, "Public Programs:

Critical Building Blocks in Health Reform," Testimony before the Senate Finance Committee, June 16, 2008.]

[v] AARP, "Access to Physicians Survey," Feb. 2007, 3.  (cited in Hacker, J., "The Case for Public Plan Choice in National Health Reform", UC Berkeley School of Law and Institute for America’s Future, Policy Brief (December 2008), available at


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