WASHINGTON, D.C. – As Congress prepares to pass a budget that includes funding for health care reform, 16 U.S. Senators today outlined how reform with a public plan option could lower health costs, improve quality of care, and ensure access in rural and other underserved areas. The need for the inclusion of a public plan option in comprehensive health reform was outlined in a letter sent today to key committee chairmen from members of Senate leadership, leaders on health care, and members of key committees. The letter was signed by U.S. Sens. Sherrod Brown (D-OH), John D. (Jay) Rockefeller (D-WV), Dick Durbin (D-IL), Charles E. Schumer (D-NY), Tom Harkin (D-IA), Daniel K. Inouye (D-HI), Carl Levin (D-MI), Jack Reed (D-RI), Debbie Stabenow (D-MI), Bernie Sanders (I-VT), Bob Casey (D-PA), Jim Webb (D-VA), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), Ted Kaufman (D-DE), and Kirsten Gillibrand (D-NY).
“As we take steps to make coverage more affordable and accessible, we must heed past experience that private insurance alone cannot accomplish our goals,” wrote the senators today in a letter to Senate Health, Education, Labor and Pensions Committee Chairman Edward Kennedy (D-MA) and Finance Committee Chairman Max Baucus (D-MT). “To achieve meaningful reform, insurers must compete based on quality and affordability – but clearly that has not always been the case. Indeed, history suggests that the insurance industry will build a business model at least in part around pushing government subsidies upward. A public option that sets the standard for quality, efficiency, and cost will create incentives for healthy competition that will serve the interests of all Americans.”
Health reform is expected to give Americans the choice between keeping their employer-sponsored health insurance or obtaining health coverage through a menu of competing plans. The senators outlined the need for a public health insurance plan option to be included in this reform as a way of keeping HMO costs in-line and ensuring health insurance access in all parts of the country. The senators emphasized that the inclusion of a public health plan option would bring much-needed competition to the private insurance market while containing costs, improving access, and setting a standard for efficiency, quality, and affordability.
Currently, the U.S. relies on a private insurance system for most working-aged individuals and families. Under this system, more than 46 million Americans are uninsured, and an additional 25 million Americans are underinsured— living with health insurance that does not adequately protect them from catastrophic health care expenses.
The senators outlined how the inclusion of a public health plan could improve access and affordability. Consumers Union found that 30 percent of the underinsured had out-of-pocket costs of $3,000 or more for a single year, and a Health Affairs study found that one quarter of underinsured people have deductibles of $1,000 or more. It is estimated that half of all personal bankruptcies are caused in part by unpaid medical bills or illness. A public plan option would set a standard for coverage and affordability—and would encourage private insurers to follow suit, by offering more services and limiting out-of-pocket costs like high deductibles and large co-payments.
Because a public health plan would have limited overhead and advertising costs, it would also set a new standard for efficiency and cost savings while bringing much-need competition to the health insurance market. According to a 2004 study, in only three U.S. states do the largest private health insurance plans control less than 50 percent of total enrollment—in only 14 U.S. states do the largest plans control less than 65 percent. In the private individual insurance market, more than 40 percent of claims are spent on administration, and in the small group market, that figure is nearly 30 percent. Medicare, the federal program providing health coverage to American seniors, spends only 5 percent on administrative costs.
Additionally, a public health plan option would lower health care costs and improve the competitiveness of U.S. businesses. Since existing employer-sponsored health coverage depends on private health insurers, health costs are high and affect competitiveness. The average employer spent $7,173 per employee for health care in 2008 and paid an average of 20 percent of total medical premium costs for workers in 2008. Depending on how the public plan option is designed, savings could total between $750 billion and $2.23 trillion over eleven years.
A full copy of the senators’ letter can be found here.
***What senators are saying about a public plan option in comprehensive health reform***
Senator Sherrod Brown (D-OH):
“Comprehensive health reform is not only a moral issue—it’s critical to getting our economy back on track. We can’t achieve economic prosperity if families are only one hospital visit away from financial disaster or American businesses struggle to compete globally due to health care costs. We must preserve access to employer-sponsored health care while increasing competition in the private market. Unfortunately, HMOs and private insurers always seem to be one step ahead of the sheriff. Including a public health plan option will keep costs down while ensuring coverage is comprehensive and accessible.”
Senator John D. (Jay) Rockefeller IV
“A public plan option must be part of health care reform. We need to provide quality, affordable coverage for the millions of Americans the insurance industry has failed and a public plan is the only reliable way to do just that,” said Senator Rockefeller, Chairman of the Senate Finance Subcommittee on Health Care. “The recent Ingenix issue and countless examples of unscrupulous insurance industry practices leave little reason to believe that private insurers alone will meet the public policy goal of providing affordable, accessible and stable health coverage to all Americans.”
Senator Charles E. Schumer (D-NY):
“A public plan option in health care reform will serve as the ‘gold standard’ for private insurance by providing an affordable choice for all Americans, covering all essential medical services and spurring innovative quality improvements across the public and private systems.”
Senator Carl Levin (D-MI)
“Reforming our health care system must be a top priority both for the well-being of our citizens and for the vitality of our economy. An affordable public option that is open to every American will help ensure the health care system remains competitive, keep health care costs down, and most importantly provide for access to quality health care for all.”
Senator Jack Reed (D-RI)
“Maintaining the coverage families already have and reducing health care costs are the hallmark of health care reform. A public plan offers an opportunity to make health care more affordable by creating competition for lower premiums – it will reduce administrative costs and leverage the bargaining power of consumers and the government.”
Senator Debbie Stabenow (D-MI):
“In the greatest country in the world, health care should be a right, not a privilege,” said Stabenow. “As the health care debate moves through Congress it is important to remember that by providing the American people with competitive choices for insurance coverage, we can save lives and cut costs in both the public and private sectors. We cannot continue to allow economic downturns destroy economic well being, along with the health of America’s families. We must provide an affordable health care option.”
Senator Bernie Sanders (I-VT):
“The United States needs to join the industrialized world with a real national health care program that guarantees comprehensive health care to every man, woman, and child, and we save money as we do that.”
Senator Jeff Merkley (D-OR):
“Oregon currently has the second-highest unemployment rate in the nation and tens of thousands of Oregon families are without health care,” said Oregon’s Senator Jeff Merkley. “The need for available, affordable health care has never been more important. A public option will put care in reach for families in my state and across the nation while encouraging innovation and efficiency in the private sector.”
Senator Kirsten Gillibrand (D-NY):
“Ensuring that every American has access to quality, affordable health care is a national priority,” said Senator Gillibrand. “With more than 47 million uninsured Americans and millions of families and businesses struggling with rising health care costs, the time to act is now. We cannot have a system in which the only choice is private plans. Everyone should have the option of buying into a not-for profit public plan at a rate that they can afford. I am proud to join with my colleagues to fight for the inclusion of a public plan option in health care reform.”