Study: Public Option May Benefit Insurers

CBO Says Gov't-Backed Coverage Would Attract Only 2%, Mostly the "Less Healthy," Driving Down Private Plans' Premiums

(AP)  What's all the fuss about?

After all the noise over Democrats' push for a government insurance plan to compete with private carriers, coverage numbers are finally in:

Two percent.

That's the estimated share of Americans younger than 65 who'd sign up for the public option plan under the health care bill that Speaker Nancy Pelosi, D-Calif., is steering toward House approval.

The underwhelming statistic is raising questions about whether the government plan will be the iron-fisted competitor that private insurers warn will shut them down or a niche operator that becomes a haven for patients with health insurance horror stories.

Some experts are wondering if lawmakers have wasted too much time arguing about the public plan, giving short shrift to basics such as ensuring that new coverage will be affordable.

"The public option is a significant issue, but its place in the debate is completely out of proportion to its actual importance to consumers," said Drew Altman, president of the nonpartisan Kaiser Family Foundation. "It has sucked all the oxygen out of the room and diverted attention from bread-and-butter consumer issues, such as affordable coverage and comprehensive benefits."

The Democratic health care bills would extend coverage to the uninsured by providing government help with premiums and prohibiting insurers from excluding people in poor health or charging them more. But to keep from piling more on the federal deficit, most of the uninsured will have to wait until 2013 for help. Even then, many will have to pay a significant share of their own health care costs.

More coverage of Health Care Reform

The latest look at the public option comes from the Congressional Budget Office, the nonpartisan economic analysts for lawmakers.

It found that the scaled-back government plan in the House bill wouldn't overtake private health insurance. To the contrary, it might help the insurers a little.

The budget office estimated that about 6 million people would sign up for the public option in 2019, when the House bill is fully phased in. That represents about 2 percent of a total of 282 million Americans under age 65. (Older people are covered through Medicare.)

The overwhelming majority of the population would remain in private health insurance plans sponsored by employers. Others, mainly low-income people, would be covered through an expanded Medicaid program.

To be fair, most people would not have access to the new public plan. Under the House bill, it would be offered through new insurance exchanges open only to those who buy coverage on their own or work for small companies. Yet even within that pool of 30 million people, only 1-in-5 would take the public option.

Who's likely to sign up?

The budget office said "a less healthy pool of enrollees" would probably be attracted to the public option, drawn by the prospect of looser rules on access to specialists and medical services.

As a result, premiums in the public plan would be higher than the average for private plans. That could nudge healthy middle-class workers and their families to sign up for private plans.

"The concern was that the public option would destabilize the bulk of private insurance, but in fact what Congress has fashioned is very targeted," said economist Karen Davis, president of the Commonwealth Fund. "It's not going to be taking away the insurance industry's core business."

It's unclear whether there are enough votes in the Senate for a public plan. The version that Majority Leader Harry Reid, D-Nev., has offered would let states opt out, probably leaving a smaller plan than the House would want.

Insurers aren't buying the budget office analysis. Asked if it might soften that opposition, industry spokesman Robert Zirkelbach of America's Health Insurance Plans responded with a curt "No."

While a government plan might start out modestly, insurers fear that Congress could change the rules later, opening it up to all people and setting take-it-or-leave payments for hospitals and medical providers, instead of negotiating, as the House bill calls for.

For the same reason, employer groups also remain wary. Big companies don't want to lose control of their health care budgets and instead have the government send them a tax bill.

"That cost is going to come back to you one way or another ... and it's coming back in the way of taxes and liabilities," said Eastman Kodak's chief executive, Antonio M. Perez, speaking for the Business Roundtable. "We just don't believe that there are miracles out there."

If Congress passes a public plan that's not much of a sensation, Democrats might have reason to regret all the time and energy they invested in it.

[babooph]

Tax "reform" was a wad for the rich-health "reform" will be a wad for the ins. co.-no need for sex "reform" the middle class was castrated during the alzheimered fools days...

[vernique]

what else is new. the rich get richer and the middle class gets poorer

[natdef_1]

Now all you Pro-Pelosi Progressive Pawns are REALLY CONFUSED, aren't you???

First, you throw your B@LLS on the line in support of this bill, as though it will singlehandedly save humankind from the "EVIL INSURANCE INDUSTRY."

Now, you find out, the Princess of Prevarication, Pelosi, has SOLD ALL YOUR SOULS TO THE INSURANCE INDUSTRY!!!!

What a beautiful irony.

MAYBE IF OBAMA HADN'T BROKEN HIS PROMISE TO HAVE THE HEALTHCARE NEGOTIATIONS TELEVISED ON CSPAN, INSTEAD OF HOLDING THEM ALL BEHIND CLOSED DOORS, YOU WOULD HAVE SEEN THIS ONE COMING!

Welcome to the beginning of your little nightmare. Next time you Libs feel the "AUDACITY TO GLOAT," realize that you are all, in fact, sheep too, just in different herd.

[askagain]

There are people who keep saying that health insurance rates will go down because of the public option. Nonsense. Rates are based on claims experience and expenses. Consumer report recently stated that the primary cause of health care costs are the doctors and hospitals. Hospitals are state regulated and must receive permission to raise rates. Unless doctor fees and hospital rates go down, premiums will not go down. Litigation was the least cause of premiums increasing. There is no way that we can insure everyone and subsidize those who can't afford the premiums without raising taxes and premiums. To believe that we can suddenly find and recoup 600 billion from Medicare is a fantasy. It hasn't been done in forty years. The only way to take money from Medicare is to lower Medicare coverage, raise the Medicare premiums, or do both. Some of you need to stop fooling yourselves.

[guest173]

we have to start somewhere. and if it gets more robust over the long haul, which is what the insurers are trying to now say according to the article, I think it will only be because the average American needs the help. corporations are not the only ones who should benefit and be wealthy and scam everyone else

[reveal4]

The most unprofitable policies will be covered by the public option...and, millions and millions more will be covered by private insurors. Primarily, younger, more healthy folks will be added to private insurance rolls. Larger rolls of healthier individuals equals cost savings for the average insuree according to the CBO.

[randomlybanned]

Thank you, CBS, for continuing your tradition of being the Obama parrot.

[RandomUser1886]

Careful, or you'll be banned again.
The Obamatons are watching.

[th9876]

the left, the right, everybody hates everybody else but the truth is in Washington DC, they are all the same. this health care "reform" bill is a sham. a total sham.

[reveal4]

The heading of the article states the public option will drive down premium costs for private insurors. The public option will save money for Americans.

[jsd330]

But for the next three years premiums are going to keep going up. Most of the big insurers have already raised their rates. They are doing the same thing the banks did with credit card intrest, raise it befor the bill goes into effect.

[reveal4]

Again, the public option will lower costs for private insurors. Lower, not raise....Lower.......Lower costs for premiums...Lower...not higher.

[askagain]

jsd330 - Again you are correct. What most posters don't understand is that the health insurance industry is already highly regulated by state insurance commissioners. Each state mandates what must be covered and the language used in policies. These mandates are expensive and vary from state to state. An insurance company can not raise rates without permission from a state. Further, every insurance company must retain enough reserves to cover future claims. This is why the insurance industry isn't in the same boat as the banks, mortgage and stock brokerage houses, GM, and Chrysler. I was in the insurance business over 20 years ago and have a pretty good understanding of how it works. Are there abuses. Certainly. But the insurance industry is not the villain many people paint them to be.

[jschmidt27]

So if a public option is going to be created for 2% of the uninsured, how much per person will it cost to create the public option? Is it going to like the stimulus which cost 160k per job? Is the govt going to spend tens of thousands to create a new system to insure each of the 2%. What a waste. I remind you the govt runs SS, Medicare and the postal service each big losers when it comes to money and efficiency. But liberals never care about the cost because it is OPM- other people's money.

[slownewsday-05]

I don't know, schmitty - many so-called "conservatives" are happy blowing money on unnecessary wars.

The Repubs are only social conservatives these days.

[us_1776]

The Republicans have wasted more taxpayer money on needless wars, needless citizen wiretapping, on decimating protections for our environment, and a whole list of other ridiculous stuff that have cost the American taxpayer MULTI-TRILLIONS OF DOLLARS and produced exactly zero return to the public treasury.

The last people I would ever trust with the public's money are the Republicans.

At least the Democrat's healthcare reform will actually reduce deficits. And that's a net gain.

[jschmidt27]

So-Slow andus- because the Republicans threw money away it is ok for the Dems to do it. Well the Dems are on the path to outdo the Republicans at spending money. And obviously the Dems just feel they can continue to tax everything and everyone. So were does it stop. Maybe when the economy tanks because of taxes putting businesses under. The US cannot survive this throw away of money. And obviously it is ok for you guys to spend the OPM. And by the way, your leaders in Congress, the ones who are under ethics charges, are the ones making the rules about how to get out of the mess we are in while they were the ones in charge for 2 years and watched subprime happen. Maybe you Dems should think about cleaning up their act. Under GWB, the justice dept locked up many Republicans. Holders Justice Dept seems to only be interested in dropping voter right cases against the New Black Panther Party.

[reveal4]

Actually, the national debt is about 90% due to Reagan and the Bushes. President Obama is responsible for about 1.2 trillion of the almost 12 trillion national debt. Clinton reduced the national debt and left a surplus. President Obama added to the national debt to deal with the mess left by George Jr's. administration. To state that "liberals don't care about the cost"...is exactly backwords. It is a matter of simple historical record that Republican administrations are responsible for 90% of the national debt. It is also historical that President Clinton reduced the national debt. Republicans are historically those who do not "care about the cost." Fact trumps foolishness.

[jschmidt27]

Reveal4-funny- the Dems have been in charge of Congress for at least 58 of the last 70 years. And you blame the Republicans for the Dems. Who created SS and medicare. Democrats. Both are out of control with entitlements that the Dems have used very well to buy votes. Both SS and Medicare will be unable to pay on the income assigned to it in a few years. So I don't think claiming "It's the Republicans fault' as your darling leader Pelosi is credible. Dems are called Tax and Spend because that is what they do.

[askagain]

Wallstreet isn't the only place you find sharpies. A prominent lawyer, John O'Quinn, was killed in an automobile accident. He received three billion dollars in fees from more than 3,000 breast-implant lawsuits. That is three billion dollars. How many zeros are in three billion? Dow Corning, the breast-implant manufacturer went bankrupt from these lawsuits. Where did its employees find jobs? And we wonder why things are so expensive. The irony is that this lawyer wasn't wearing a seat-belt.

[FauxNews]

Best news all week. Bet he is trying to sue God now for raining on the Allen Parkway.

[sean7phil]

I support a public option but this article gives me the creeps. It has no author listed but is written like an editorial column or a piece of marketing material while pretending to be straight journalism. Everyone should be concerned when the does this. Unless you want to call it an editorial keep your damn opinions out of the news.

[askagain]

Affordability of health insurance got lost in the health care debate. Instead we argued over single payer plans, universal health care coverage, public options, uninsurable people, and pre-existing conditions. These are all important but do not address the issue of affordability. The reform is probably a boom for health insurance companies and health care providers but does not appear to offer relief to the taxpayers and those of us who already have insurance. Massachusetts discovered that insuring everyone does not lower premiums. In fact, premiums in Massachusetts are going up 10% per year.

[ubrew12]

The experience of every one of our major capitalist trading partners is that some form of single-payer healthcare (i.e. gov't mandated public option or gov't maximally regulated private options) will cut our healthcare costs in HALF. That's a savings of one trillion dollars a year, just in healthcare. And this savings will show up immediately in the competitiveness of every product America makes (outside of healthcare): in our automobiles, our airplanes, our military hardware, software... EVERYTHING. That's why Britain went to single payer 60 years ago, and Canada, France, Taiwan, Japan, and everyone else did at least 30 years ago. We really are the odd-man out this time, and not in a good way. It may be 'socialism' but I don't care. The international competitiveness of "Made in America' is at stake here, and opting for our expensive privatized system is, frankly, at this point in time, unpatriotic and uncapitalist.

[jimmyc1955]

That just isn't true. The tax structures of every single payer health system is significantly higher than in the US. So your "cost savings" is simply a transfer of costs from insurance premiums to tax bills.

We are the odd man out - but we don't ration health care as they do in Canada, France, England and other places. We don't wait 4 months to 2 years for an MRI. Thats how cost savings are accomplished. Plus they don't have the highly litigious court systems we do - where lawyers are all in a no loose condition.

[askagain]

I came upon this quote by Hitler. ?How fortunate for leaders that men do not think.? Does this apply to the health care debate?

[askagain]

stn_sage - Exactly. The problem is that the Democratic party is not united. That being the case, you can't blame the Republicans for that. Even when the Republicans are in power, the Republicans, too, are often fractured. The Democrats have the potential for immense power if they would get their act together and act as an united party. This fracturing can be viewed as good or bad. It tends to prevent radical changes but also slows down the process. Isn't the American system beautiful?

[ubrew12]

I would say this bill gives the American people what they asked for. Not wanting to appear 'communist' by approving some form of single-payer healthcare, Americans are now going to be charged full-privatized-price for every citizen, including their 44 million uninsured. They apparently don't realize that the rest of the developed world went to single payer precisely because its the only way to reach for universal healthcare without breaking the bank.

But Americans never met a bank they didn't want to break, it appears.

[askagain]

rightbehind - Does it make sense to keep kicking a dead dog. He bit you, he's dead, why not bury him? The Republicans are not in power. Hate them all you want. That doesn't change the fact that the Republicans are out of power. It sounds, from your posts, that you like to chase ghosts. At some point you must accept that all three branches of government are controlled by the Democrats. If you don't like what is happening, go after the Democrats. They are making the decisions.

[rightbehind]

Wrong, The democrats now control 2 branches of government. The Supreme court is still controlled by republicans. As for the republicans they are getting what they give which is what they deserve. The more they squeal the more I know this country is heading in the right direction. But thanks for the advice. You really shouldn't associate the republicans with a dead dog. Dogs for the most part are very loyal and protect their entrusted domains. What the republicans party has done would be like a dog taking a dump inside the house. I doubt many home owners will put up with that. The voters are on to them. It's time we sent them the way of the Whigs.

[lightningF]

1990 pages of garbage,and it only took 65 pages to create Social Security . Ever wonder! Why, the bill is so confusing,that no one wants to read it? It probably contains exemptions for congress and the Unions,plus Bonuses for AIG,which they are still paying out,even after the Tax Payers bailed them out, and Obama fretted anger.What are they hiding?

[rightbehind]

The health care insurance companies only want a winning hand. They want to dump their bad cards on the government. Tank every bill except the robust public option available to all that want it and force a vote on it. We either get a strong robust public option or we get a list of politicians to send packing then we go for single payer. If the democrats do not force a vote on a good bill they are done and will loose control of he house and possibly the senate. If they force a vote on a good bill we would win either way. We either get a good health care bill or a list of politicians to send packing. Tank all the health care bills except the robust public option. I would rather a good bill fail than have a bad bill pass.

[rightbehind]

If the republicans loose the 3 races this week the yellow dogs will get in line quick. Tank the current released house bill and demand the robust public option.

[BlueDogDem]

Unfortunately, I don't think it's going to happen. The Dems actually could lose all three. Virginia's race is over, New Jersey is neck-a-neck, and NY 23 is a wild card which is anyone's guess.

[ludvig1-2009]

Driving down private plan premiums? My monthly health premium is going to increase from $237 to $291, while the CPI says I won't get an increase in my pension at all. The problem with American health plans is their motivated by greed, CEO's getting paid millions of dollars. We need to go the Canadian plan. I just talked to a Canadian visiting his sister the nun down the street and he told me he's living in Arizona, but American doctors only give him pills so he flew back to Canada, called his doctor, got 22 X-rays and an MRI two days later. He also says he pays no premiums and the maximum charge to see a doctor is $32. I pay my premium and then I still pay $30 to see the doctor. Enough with the insurance companies greed. Publicize everything. Eliminate the private sector, I'm ready for socialism with all the rip-offs going on by the private sector.