U.C. Berkeley Study Confirms the Value of a "Public Option"
A new public health insurance plan that competes directly with private insurers is essential to controlling health care costs and improving quality of care, according to a new report released yesterday by the U.C. Berkeley Center On Health, Economic & Family Security. President-elect Obama, his health care point person Tom Daschle, Senate Finance Committee Chairman Sen. Max Baucus, D-MT, and House Ways and Means Health Subcommittee Chairman Rep. Peter Stark, D-Calif., have all embraced such a move.
Highlights of the report include:
* A public health plan option like Medicare could result in $1 trillion in national savings over ten years by driving down costs, improving efficiencies and fostering innovation.
* Premiums with a public plan cost about three-quarters the amount private insurers charge.
* Public health insurance is less expensive to administer that private insurance plans. The public Medicare plan's administrative overhead costs (in the range of 3 percent) are well below the overhead of large companies that are self-insured (5 to 10 percent of premiums), companies in the small group market (25 to 27 percent of premiums), and individual insurance (40 percent of premiums). The Congressional Budget Office and the General Accounting Office have found that administrative costs under the public Medicare plan are 2 percent of expenditures compared to 16.7 percent by private health insurers under Medicare Advantage.
* Access to medical care under Medicare is stable. 97 percent of physicians are accepting new public Medicare plan patients-virtually the same rate as are accepting private PPO patients-with 80 percent reporting thay accepted all or most patients. 80 percent of people with Medicare are either "extremely" or "very satisfied" with their health care and access to physicians, a higher rate than for 50 to 64 year olds with private insurance.
* The Federal Employees Health Benefits Plan, frequently invoked as a model of national reform, fails to restrain costs. The FEHB, which contracts with private plans to provide health insurance to employees of the federal government, has experienced an annual spending growth rate of 7.3 percent-25% more than Medicare.
Read Consumer Watchdog's letter to President-elect Obama urging him to fulfill his campaign pledge to make health care affordable and available by allowing any American to join Medicare, regardless of age.