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Wednesday, June 17, 2009

The Future of Health Care

Obama and Congress seek to balance quality, choice, affordability and access

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It’s now or never. President Barack Obama has argued that the country cannot wait any longer for the health care system to be reformed: Congress must act this summer and implement its plan in the coming years.

“We need health care reform because it’s central to our economic future,” Obama said in Green Bay last week. “It’s central to our long-term prosperity as a nation.”

While Obama himself is not crafting the legislation that will revamp the health care and insurance industries—he’s leaving that to a handful of senators and congressmen—he has articulated the principles he believes are key to smart reform. Obama wants health care providers to be more efficient and to stop equating expensive care with good care. He wants the insurance industry to stop discriminating against people with pre-existing conditions. He wants individuals to prevent health crises by focusing on everyday wellness strategies that can have a big impact on their health and quality of life.

And, perhaps most important, Obama wants all Americans to have access to a range of affordable health insurance policies. That includes creating a “public option” insurance plan, a concept that’s generated controversy in Congress and in the health care community. No matter: Obama reiterated his support for the public option last week in Green Bay and on Monday when speaking to the American Medical Association.

“The reason is not because we want a government takeover of health care… We want some competition. If the private insurance companies have to compete with a public option, it’ll keep them honest and help keep their prices down,” Obama said in Green Bay.

But what, exactly, is the “public option”? And would it make insurance more affordable, especially for the 47 million Americans currently without insurance? And would it lead to a government takeover of the health care industry? Here are the answers to some of the most common questions about the public option.

Q: What is the public option?

A: While the details haven’t been worked out yet, what’s commonly called the “public option” is a government-sponsored insurance program much like Medicare, although you wouldn’t have to be 65 to enroll. It isn’t free; those who choose it would have to pay for it, just like private insurance, although there likely would be a sliding scale according to one’s ability to pay.

Q: How would the public plan be offered?

A: Obama is proposing a National Health Insurance Exchange for people who cannot afford insurance on their own or those who want to opt out of their employers’ plan and look at alternatives. The exchange would have a handful of health insurance plans—from private insurers—that could not discriminate against people with pre-existing conditions and would provide standard benefits packages.

The public plan could also be offered on the exchange, although that isn’t a done deal. We’ll have to wait and see if the legislation developed in Congress includes it, and, if it doesn’t, whether it could be added after a robust public debate. Obama’s advocacy and public support could make the difference.

Q: Why is the public option so important?

A: As Obama said in Green Bay, it would help to create more competition in the marketplace. Right now, most people only have one choice of insurance providers—the company chosen by his or her employer. Affordable, quality individual or family coverage not sponsored by one’s employer is rare in the current marketplace.

If the public option were to be offered, private insurance companies would have to compete with the public plan for customers. That could mean lowering premiums, providing better coverage or offering better policies to attract new policyholders.

“I’m looking forward to having many insurance companies competing for all of us and leveraging down their prices through the marketplace,” Congressman Steve Kagan (D-Green Bay) told reporters recently.

Q: How would this be paid for?

A: The details haven’t been finalized, but the goal is to have the premiums pay for the plan. Robert Kraig, director of program at Citizen Action of Wisconsin, said there would be an ethic of shared responsibility. If an employer does not offer health insurance, it would have to contribute something to an employee’s coverage from a private insurer or the public entity, although that contribution would most likely be less than what it would have to pay in the current health care system. An individual would have to pay as well, although the government could provide subsidies or tax breaks based on one’s income.

And Obama has said that making the health care delivery system more efficient would save billions of dollars in the coming years. He has also said that raising some taxes on the wealthiest Americans could help pay for reforms.

Q: How would the public option save people money?

A: Costs would be lower because the pool of policyholders would be big, and therefore spread risk around. What’s more, if more people have insurance coverage, they can address their health issues before they become crises and require expensive care. And then, of course, there’s cost-shifting, where patients with insurance are charged more to cover the costs of those who don’t have insurance. Obama has said that about $1,000 of each insurance premium covers the cost of people who are not insured.

In addition, the public plan would not need to generate huge profits for shareholders or corporate executives, as private insurance companies are forced to do. Nor would it spend huge sums on administrative costs like challenging claims so that they can be denied, or actuarial analyses to determine price and coverage. “There are a lot of administrative costs in discriminating against people,” said Citizen Action’s Kraig.

Q: Do you have any numbers to back this up?

A: Yes. A recent Citizen Action of Wisconsin report based on a study by the nonpartisan health care consultants The Lewin Group found that Wisconsin employers would save $1.8 billion a year if the health insurance exchange included a public option. Without a public option, Wisconsin employers would save $700 million annually.

Families would save, too. The same study found that family group health insurance premiums could decrease by as much as 33% (about $4,000 annually) with the competition created by the public plan; the same family would save about 14% without the public option. Individual policies would decrease about 27% with the public option, but there would not be any meaningful savings if a public option were not offered.

Q: Wouldn’t this put insurance companies out of business?

A: Some would argue that insurance companies are putting themselves out of busi ness, and that Obama’s call for increased insurance coverage would save them. Currently, about 47 million Americans do not have insurance, and that represents 47 million potential customers for insurance companies. And according to a June 7 Los Angeles Times article, private insurers will be losing even more customers in the coming years because millions of baby boomers will soon be going on Medicare. That’s why many insurers are supporting calls for mandated coverage, with tax breaks or government subsidies for people who can’t afford it on their own. That could bring millions of new customers back to private insurance companies, even though many people would choose the public option for their coverage.

Q: Isn’t this socialized medicine?

A: Obama refuted this claim in Green Bay: “Socialized medicine would mean that the government would basically run all of health care. They would hire the doctors, they would run the hospitals. They would just run the whole thing. Great Britain has a system of socialized medicine. Nobody is talking about doing that, all right?”

Q: Wouldn’t this lead to 120 million people losing their current coverage?

A: Although Congressman Paul Ryan (R-Janesville) has repeated former Bush adviser Karl Rove’s recent claim that 120 million people would likely lose their health insurance, it’s false, according to the St. Petersburg Times-sponsored Politi-Fact.com. The nonpartisan fact-checking site found that Rove’s argument misrepresents a study that ran a number of different insurance-industry reform scenarios.

Rove (and Ryan) chose to highlight the most extreme, highly unlikely scenario, and they distorted the fact that 120 million people would not lose their health insurance—they would be choosing a different, likely cheaper, option. “Rove is picking the worst-case scenario and then distorting the cause and effects,” PolitiFact wrote. “We rate Rove’s statement False.”

And Obama has repeated over and over that “if you’ve got health insurance that you’re happy with through the private sector, then we’re not going to force you to do anything.”

Q: What happens next?

A: Congress is starting to develop a variety of plans, based—perhaps—on Obama’s big-picture principles. Democratic leaders will develop about three plans, and the Republicans have already released their own—although it’s very different from what Obama has in mind. Once the plans emerge, congressional leaders will begin negotiating the details. Obama—and the voters—will need to make their voices heard throughout the summer if they wish to shape this debate. The administration has set up the HealthReform.gov Web site to disseminate information about health care reform.

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