Report

The Case for Public Plan Choice in National Health Reform

Alex Lawson — Tue, 16 Dec 2008 14:23:40 -0800

Read the Key Findings »
Read Full Report »

A health care system that contains costs and drives value must include a good public plan if the broad goals of reform—universal insurance and improved value—are to be achieved. Private insurance and public insurance have distinct strengths and weaknesses, and thus should be encouraged to compete side by side to attract enrollees on a level playing field that rewards plans that deliver better value and health to their enrollees. Public insurance has a better track record at reining in costs, while preserving access; it has pioneered key quality and payment innovations that have often set the standard for private plans; it is essential to set a standard against which private plans must compete to drive value and can be a source of stability for people. Private plans are a source of new benefit options, and continuing pressure for innovation in benefit design and care management strategies.

According to opinion polling, most Americans want public and private insurance competing side by side so that they can choose the best option for themselves and their families. Both should have a chance to prove their strengths and improve their weaknesses in a competitive partnership.

Go to the dedicated web page for the report here»
Listen to an MP3 of the Press Conference releasing the report here»

Health Care For America

Jacob S. Hacker — Thu, 11 Jan 2007 08:22:20 -0800

America's $2.2-trillion-a-year medical complex is enormously wasteful, ill-targeted, inefficient, and unfair. The best medical care is extremely good, but the Rube Goldberg system through which that care is financed is extremely bad—and falling apart. One out of three non-elderly Americans spend some time without health insurance every two years, and the majority of those remain uninsured for more than nine months. Meanwhile, runaway health costs have become an increasingly grave threat, not just to the security of family finances, but also to corporate America's bottom line. The United States spends much more as a share of its economy on health care than any other nation, and yet all this spending has failed to buy Americans the one thing that health insurance is supposed to provide: health security.

Taking Stock of Exchanges: Bigger is Better

Timothy Stoltzfus Jost — Tue, 27 Oct 2009 12:53:13 -0700

This fact sheet is a summary of a paper entitled "Taking Stock of Exchanges: Bigger is Better." Read the full report.

The different health reform bills pending in Congress represent quite different understandings of what a health insurance exchange is, what it does, how it is organized and how it functions. These differences are likely to affect significantly the extent to which the exchanges accomplish their goals and avoid the problems that have afflicted earlier attempts at creating and operating exchanges.

The exchanges should operate at the federal level, as the House health care reform bill, America's Affordable Health Choices Act of 2009, or HR 3200, provides.

The health reform legislation is federal law addressing problems with access to health care and rapidly rising health care costs that are national in scope.
Congress is creating exchanges under federal law that will be carrying out functions specified by federal law, administering federal premium subsidies, and initially receiving federal start-up funds.
As we have learned from our experience with Medicaid, HIPAA, and other programs, state implementation of a federal program under federal supervision is at best awkward.
It is difficult for the federal government to regulate a co-sovereign, especially when large sums of money are flowing through the states, as would be true with the premium subsidies, creating a tempting pool for the states to use for their own purposes.
The federal government cannot under our constitutional system “commandeer” state government for its regulatory purposes. To secure state cooperation in implementing a federal program, it must either use the carrot of federal funds (as with Medicaid) or the stick of a threat of a federal fallback program in states that refuse to implement a mandated program themselves.
The three biggest “exchanges” in the country are run by the federal government–the Federal Employee Health Benefits Program, the Medicare Advantage program, and the Medicare Part D drug program. The federal government has also long been primarily responsible under ERISA for regulating employee benefit plans, the largest source of health insurance in the country.
The Finance bill establishes national private plans, which logically should be regulated by a national exchange.

Congress should minimize adverse selection. Insurers should be allowed to sell their products only through the exchange, as HR 3200 provides for individual policies, and Congress should limit premium and affordability subsidies to the exchange as all the bills do.

This avoids the problem of agents and brokers steering their customers away from the exchange when they can make higher commissions for sales outside of the exchange.
It also creates a larger exchange risk pool.

To the extent insurers can sell their products outside the exchange, insurers in and outside the exchange should be required to play by the same rules, as they are under HR 3200 and the Senate Finance bill.

Do not allow less generous plans to exist outside the exchange, as the HELP bill does.
Though it is hard to see how it can be enforced, require all individuals in and out of the exchange to be treated as being in a single risk pool and all small groups in and out of the exchange also to be treated as a single risk pool, as the Senate bills both do.
Require insurers to charge the same price for plans sold both in and out of the exchange, as the Senate Finance bill does.

Insurers that attract good risks should be required through risk adjustment to compensate insurers who end up with bad risks to reduce incentive to risk select.

The Senate bills provide for risk reallocation both in and out of the exchange and thus could make a substantial contribution to addressing this problem. The Senate Finance bill probably does the best job of bringing uniformity in and out of the exchange, but its risk adjustment mechanism is hard to follow. The risk reallocation approach of the HELP bill is much more straightforward.
HR 3200 only provides for risk adjustment within the exchange and so will do little to protect exchanges from adverse selection.
Risk reallocation requires a great deal of data to be done successfully. The mechanism for it working outside the exchange is not clear since, for example, premiums outside the exchange are paid directly to the insurer.
The best solution is for all individuals and small groups eligible for insurance through the exchange to have to purchase through the exchange, as HR 3200 requires with the individual market. If not, some combination of uniform benefits, single risk pools, uniform prices, and risk reallocation in and out of the exchange may work.

Exchanges should make insurance plans more standard and more transparent, thus enabling consumers to make more informed choices and promoting head-to-head competition among plans.

All of the bills do a reasonably good job with standardizing plans.

All require plans sold within the exchange to cover essential benefits, limit cost-sharing (albeit at very high levels), exclude (or limit) annual or lifetime limits, and provide an opportunity for appealing coverage decisions.
Each bill also standardizes and specifies tiers of coverage defined by actuarial value (in effect, levels of cost-sharing) into which plans must fit. This should also facilitate comparison of plans by purchasers.
HR 3200 and the Finance bill standardize plans both inside and outside of the exchange, permitting consumers to also consider the benefits of purchasing within the exchange or going outside of it.
All bills also include provisions that should make plan coverage more transparent, requiring the disclosure of information about premiums, cost-sharing, network providers, benefits, and other issues of concern to consumers.
The Finance Committee provisions offer by far the most detailed and creative approach to transparency, including rating plans for cost and quality and price, describing each insurance plan using standard defined terms in a four-page summary, and providing model scenarios describing coverage and cost-sharing for particular medical conditions.

Exchanges create large purchasing pools within the nongroup and small group markets, which should offer some efficiencies and should reduce administrative costs, making health insurance more affordable and accessible.

Exchanges also cost money and must create efficiencies in the purchase of insurance if they are to save money over all.
- The Senate bills provide for surcharges on insurance premiums to fund exchanges. HR 3200 would fund the exchanges from the excise taxes received from individuals or employers who fail to comply with coverage mandates and would cost less because it would involve one federal agency and not 50 state agencies.
- As long as the exchange has only a small market share it is unlikely to achieve significant administrative cost savings because insurers are likely to continue to carry on their current functions, largely duplicating exchange functions.
One federal exchange should help reduce overall costs far more than 50 separate state exchanges.
The rating reforms in the bills generally should reduce underwriting costs, both in and out of the exchange.
Enrollment in health plans through the exchange could reduce the cost to health plans of enrolling members.
Information transmitted through the exchange could reduce marketing costs.
The exchange should reduce brokerage commissions, which consume from 2 to 8 percent of the premiums of group plans and a much higher percentage of premiums in the nongroup market. Eliminating their commissions could result in substantial cost reductions for the health care system overall.
- Brokers would seem to be completely redundant with the exchange in the nongroup market and for individual employees who enroll in insurance through the exchange.
- Both the Blue Dog amendments to HR 3200 and the Senate Finance bill retain brokerage commissions, although the Finance bill would regulate them.
- Brokers’ fees should at least be regulated, recognizing that brokers in fact no longer play a useful role once the exchange is established. The Finance Committee bill contains this possibility.

Comparing the Employer Requirements in the Congressional Health Proposals

Alex Lawson — Mon, 05 Oct 2009 08:22:21 -0700

Download as a PDF here

Requiring employers to provide health care coverage or contribute to its cost is essential if Congress seeks to encourage employers to continue to offer health insurance under the proposed reforms. An employer requirement:
• Levels the playing field between employers;
• Reduces the incentive for employers to drop coverage and shift costs onto the public (“crowd-out.”);
• Provides revenue to pay for the coverage expansion.

The structure of the employer requirement will determine:
• How much revenue is generated, how many people end up with employer-based insurance, and how health costs affect competition between employers.
• Ease of administration.
• Potential for labor market distortions.

In a competitive market, employers should continue to directly provide coverage if the cost of the premiums is less than the cost of the penalty plus the cost of raising the workers’ wages enough to allow them to purchase equal plans through the exchange, taking into account the subsidies available to their workers in the exchange if they are not offered coverage on the job.

HR 3200 is the most effective in meeting the objectives of an employer requirement.
• Easy to administer: Requires firms to provide health coverage to their employees or pay a percent of payroll into the exchange. Firms with total payrolls below $500,000 a year are exempt. Firms with payrolls between $500,000 and $750,000 would pay on a sliding scale starting at 2 percent. Those with payrolls over $750,000 would pay 8 percent of payroll. As a point of comparison, the average firm currently spends 10 percent of payroll on health care.(1) To qualify as providing coverage, the employer would need to contribute at least 72.5 percent of the premium cost for the lowest cost individual plan that meets the minimum benefit standard, and 65 percent of the premium for family coverage.
• Effective in preventing crowd-out: Only those employers whose workers have average family incomes below 200 percent of the federal poverty level would gain from ceasing to offer coverage. Ten percent of workers with coverage through an employer are in families with incomes below 200 percent of the federal poverty level.(2)
• Low risk of labor market distortions: Equivalent to moderate increase in minimum wage. It’s likely that costs for workers earning above the minimum wage will be passed on to workers in the form of forgone wages. Two recent studies of employer requirements, one on Hawaii,(3) the other on San Francisco, found no measurable effect on employment.(4)
• Employer 10-year contribution, according to CBO, $163 billion.(5)
• Other: Payroll size (HR 3200) is a better measure of a firm’s ability to pay than the number of workers (HELP bill).

Senate HELP bill would do little to level the playing field among employers or prevent crowd-out.
• Easy to administer: Employers would be required to cover 60 percent of the premium cost of a plan that meets the minimum qualifying standards or to pay $750 per employee who is not offered coverage and $375 on each part-time employee. The requirement applies to firms with more than 25 employees.
• Limited effectiveness in preventing crowd-out: The $750 a year requirement compares to an average annual individual coverage cost of $4,757 and $13,122 for family coverage.(6) A larger share of employers would gain advantage from dropping coverage than in the House bill. Firms with median family incomes below 300 percent of the federal poverty level would largely do better by paying the fee and shifting costs onto the public; the exact benefit would depend on family size and average worker age. Twenty-five percent of the people with coverage through an employer are in families with incomes under 300 percent of the federal poverty level.
• Low risk of labor market distortions: As with the House bill, the HELP bill is not likely to have any negative impact on employment.
• Employer 10-year contribution, according to CBO: $52 billion.(7)

Senate Finance proposal has the greatest potential for labor market distortions; it creates an incentive to reduce worker hours and raises the relative cost of hiring individuals in low- and middle-income families.
• Complex and expensive to administer, creating a high potential for error:(8) Employers with more than fifty full-time workers—defined as thirty hours a week—who do not offer health coverage would pay a fee based on the amount of tax subsidies those workers receive in the exchange. The total amount required of any employer is capped at $400 for every employee in the firm. Unlike the House and HELP bills, employers would be dependent on after-the-fact reports in order to determine their liability.
• Limited effectiveness in preventing crowd-out. Requirement for firms with a large share of subsidy-eligible employees is too low to be effective, and firms with a low share of subsidy-eligible employees are likely to try to evade the requirement.
• Greatest risk of labor market distortions because it only applies to fulltime workers, and firms can easily avoid it by reducing work hours.(9) The provision also raises privacy considerations for employees.
• Employer 10-year contribution, according to CBO: Not yet scored.

1. Bureau of Labor Statistics, “Employer Cost for Employee Compensation,” available at
http://www.bls.gov/ncs/ect/data.htm (last accessed June 2009).
2. Current Population Survey, March Supplement, 2008.
3. Thomas C. Buchmueller, John DiNardo, and Rob Valletta, "The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii," Discussion Papers 4152 (IZA: Institute for the Study of Labor, 2009).
4. Arindrajit Dube, William H. Dow, and Carrie Hoverman Colla, “The Impact of San Francisco's Employer Health Spending Requirement: Initial Findings from the Labor and Product Markets,” UC Berkeley Institute for Research on Labor and Employment, August 2009. http://irle.berkeley.edu/cwed/wp/sfhealth_09.pdf
5. Douglass Elmendorf, Congressional Budget Office letter to Charles Rangel, Chairman, Committee on Weighs and Means, U.S. House of Representatives, July 17, 2009.
6. Kaiser Family Foundation and Health Research and Educational Trust, Survey of Employer Health Benefits 2008.
7. Douglass Elmendorf, Congressional Budget Office letter to Hon. Ted Kennedy, Chairman, Health, Education, Labor and Pensions, United States Senate, July 2, 2009.
8. Judith Solomon and Robert Greenstein, “Employer Requirement In Baucus Health Package Would Have Unintended Effect Of Discouraging Hiring Of Low-Income And Minority Workers,” Center on Budget and Policy Priorities, September 8, 2009. http://www.cbpp.org/files/9-8-09health2.pdf
9. Solomon and Greenstein, 2009.

Health Policy Experts Speak Out About Why A Public Insurance Option Is Essential For Reform

Alex Lawson — Tue, 22 Sep 2009 15:59:59 -0700

WASHINGTON -- As sweeping health care reform legislation moves on Capitol Hill, the Institute for America’s Future compiled the following statements from health care experts and leaders in support of a public insurance option to compete with private insurers. Media representatives interested in scheduling an interview with any of these experts may find their contact information at http://institute.ourfuture.org/healthexperts.

Health Care Experts Statements

Download these statements as a PDF here

ROBERT REICH, FORMER U.S. LABOR SECRETARY: “The public option works because it would have the scale and authority to negotiate lower prices from health care providers. This would push the private insurers to get the same deals. The public option has to be big and national to do that, so don’t be fooled by the idea of so-called cooperatives. They’d be too small and scattered to have the scale and bargaining leverage of a public option, and would therefore be designed to fail.”[ourfuture.org, 9/11/09]

SEN. JAY ROCKEFELLER, D-W.VA.: “Without the steady, positive influence of a public plan option in the marketplace, we will never truly solve the health care crisis in this country. Private health insurance has a long history of cutting people off or charging too much for too little... Shared responsibility – that includes insurers – is the only answer and a public plan is the only real solution.” [Sen. Rockefeller’s website, 6/10/09]

WENDELL POTTER, FORMER VICE PRESIDENT OF COMMUNICATIONS, CIGNA: “The idea of nonprofit cooperatives being able to compete effectively with the cartel of large for-profit insurers that dominate the market today is so naive one has to wonder if the legislative language proposing their creation was written by insurance company lobbyists.” [Reuters, 7/30/09]

LEN NICHOLS, HEALTH POLICY PROGRAM DIRECTOR, NEW AMERICA FOUNDATION: “In many of our small group markets there is precious little effective competition. A public option in these markets could be catalytic to the kinds of market competition that we need and that the President has always supported.” [E-mail, 9/17/09]

JACOB HACKER, PROFESSOR, YALE UNIVERSITY: “There is absolutely no reason to think that cooperatives of any sort could achieve the three crucial goals that a competing public plan must accomplish—provide a backup option offering health and financial security to individuals without employer coverage, a cost and quality benchmark, and a cost-control backstop that drives payment and delivery system reform.” [ourfuture.org, 8/20/09]

DEAN BAKER, CO-DIRECTOR, CENTER FOR ECONOMIC AND POLICY RESEARCH: “A public option is about giving people a choice. There is a great deal of evidence, most importantly from the publicly run Medicare system, that a public plan can provide high quality care at lower cost than private alternatives. The opponents of a public plan argue that this is exactly the problem, that a low cost public plan would drive private insurers out of business. But why would we want to keep private insurers in business that cannot compete with a more efficient public plan. The argument that a public plan would win out because of subsidies is absurd on its face. For a less efficient public plan to drive out more efficient private plans it would require trillions of dollars in subsidies over coming decades. It is inconceivable that the opponents of a public plan – which is proven to be a failure – would not be able to prevent trillions of dollars being spent to support it. In short, opposition to a public plan is about protecting insurance industry profits. There is no other plausible explanation.” [E-mail, 9/20/09]

JAMES MORONE, PROFESSOR, BROWN UNIVERSITY: “What a strange, strange argument. The public option might be too effective and too popular. Therefore, let's not have it. America's favorite programs are all public option—social security and Medicare. Come to think of it, the Republicans opposed those too!” [E-mail, 9/17/09]

GERARD ANDERSON, DIRECTOR, JOHNS HOPKINS CENTER FOR HOSPITAL FINANCE AND MANAGEMENT: “The public option will succeed if it meets the needs of the American public. The market place is the best way to see if the American public is happy with only the private insurance option.” [E-mail, 9/17/09]

ROGER HICKEY, CO-DIRECTOR, CAMPAIGN FOR AMERICA’S FUTURE: “President Obama and most Democrats are now willing to give the insurance companies what they wanted all along – a mandate that will force 47 million people who don’t have insurance (and everyone who loses their job or their employer-sponsored insurance) to quickly buy an insurance policy. In exchange, the companies will allow Obama and the Congress to pass laws that try to stop their discriminatory sales practice. But the individual mandate means a massive windfall for the insurance companies – all those millions of people who will have to buy insurance. What do Obama and the Democrats get? They had better make sure the insurance industry sells decent insurance policies that are affordable for those millions of people who are going to be forced to buy them. That’s where the national public option comes in – giving the private insurance companies price competition from a government insurance plan that puts the interests of the public first and sells good insurance at affordable prices. The public option also gives us all some transparent benchmark information about how economically a company can sell insurance with good, reliable health benefits.” [E-mail, 9/21/09]

DIANE ARCHER, HEALTH CARE PROJECT DIRECTOR, INSTITUTE FOR AMERICA’S FUTURE: “Insurance regulations will not rein in high health insurance premiums without a public health insurance plan in the mix to set a benchmark on costs. Insurance regulations also cannot protect Americans with costly health conditions from high provider costs when they are forced to go out-of-network for needed care. If Congress is going to require Americans to buy insurance, it must offer them a public insurance option with a broad national network and capped provider rates to ensure their access to care and to protect them from medical bankruptcies. The only other alternative is all-payer rate-setting, a cap on all provider rates, which Congress has been unwilling to consider.” [E-mail, 9/21/09]

KAREN DAVIS, PRESIDENT, COMMONWEALTH FUND: “If you want do something about the cost problem and you really want to change the competitive nature of the insurance market, you need a public plan.” [Reuters, 9/21/09]

GLEN HACKBARTH, CHAIR, MEDPAC: “Rather than rely on one model or the other, we should strive to offer Americans a fair choice between the two different approaches, a public plan modeled on Medicare and more flexible, innovative private plans. That ‘fair choice’ should include a strong incentive to select a low-cost, high value plan. Some private plans will not survive this competition—namely, plans that do little more than offer free choice of provider, fee-for-service coverage. We don't need those plans; a public plan can do that better. By combining a public plan with universal coverage, we would instead be providing a strong market signal, and opportunity, for innovative private plans, those that do things that a public plan finds very difficult.” [IAF, 12/11/08]

UWE REINHARDT, PROFESSOR, PRINCETON UNIVERSITY: “[T]he public plan may have a price advantage in the market for health care, which would give them an advantage in the market for health insurance products, which they consider unfair. [But], large insurance companies, such as Aetna or Wellpoint, also have a price advantage vis a vis smaller insurance carriers in the market for health services. Is that unfair? Does that make for a level playing field? John Goodman worries that the public plan would set fees so low that doctors and hospitals would not accept patients covered by the plan. If that obtained, then presumably Americans having a choice of private plans alongside the public plan would not opt for the latter, which would then either whither away or have to raise fees until it is competitive in the market for enrollees. This is how competitive markets work, John.” [IAF, 12/10/08]

DR. VALERIE ARKOOSH, PRESIDENT, NATIONAL PHYSICIANS ALLIANCE: “The thousands of devastating stories of Americans unable to get care can make it feel impossible to practice medicine some days. But these stories also serve to remind us every day of our ethical duties to put our patients' care ahead of insurance companies. Competition provides us with choice and makes our market better—and a strong, national health insurance option would do the same.” [SEIU, 6/15/09]

DR. SALOMEH KEYHANI, PROFESSOR, MOUNT SINAI SCHOOL OF MEDICINE: “We analyzed the [physician survey] data in multiple ways to understand physician opinion on health reform. We found that no matter how you sliced the data, physicians demonstrated majority support for a public health insurance option, regardless of their type of practice or where they live.” [Robert Wood Johnson Foundation, 9/14/09]

RICK BROWN, PROFESSOR, UCLA: “Public health insurance, like Medicare, is coverage that people can count on. Its eligibility and benefits are the same throughout the nation. If you meet the eligibility requirements in Montana, you will also be eligible in New York, Florida or California. If a service is covered in one state, you will know that it's covered in all states. The same transparent decision-making process, required of all public agencies, will apply nationwide, in contrast to private health plans.” [E-mail, 9/17/09]

BRIAN BILES, FORMER DEPUTY ASSISTANT SECRETARY, U.S. HEALTH AND HUMAN SERVICES AND GEORGE WASHINGTON UNIVERSITY PROFESSOR: “Medicare is our only truly national health insurance program with beneficiaries and participating hospitals and doctors throughout the county. A Medicare based plan, as an option for health insurance coverage, is the only real way to provide a safety net plan that guarantees basic coverage is available everywhere in the nation. A Medicare based plan would inject new competitive pressure on the private insurers to negotiate tougher with providers and reduce the rate of increase in health care costs.” [E-mail, 9/22/09]

GERALD KOMINSKI, PROFESSOR, UCLA: “The Medicare program itself provides the best evidence of the importance of a public option. Medicare Advantage private plans do not compete effectively on price, costing taxpayers on average about 14% more for the same care provided for less within traditional Medicare, which is the public option.” [E-mail, 9/17/09]

MARK HALL, LAW AND PUBLIC HEALTH PROFESSOR, WAKE FOREST UNIVERSITY: “A public health insurance option can exercise the bargaining leverage that health insurers need to negotiate effectively for all medical services. Currently, private insurers do not negotiate over rates for out-of-network care. Even within the network, they often are unable to negotiate favorable rates with key specialists or for critical hospital services when there is little or no competition locally among these providers. A public insurer can help remedy these market defects.” [E-mail, 9/17/09]

HAROLD POLLACK, PROFESSOR, UNIVERSITY OF CHICAGO: “The public option rightly commands broad support among health policy experts, citizens, and health care providers. The choice of a strong public option alongside private plans would provide a valuable backstop for millions of consumers and would improve the quality and efficiency of our health system.” [E-mail, 9/17/09]

TIMOTHY JOST, PROFESSOR, WASHINGTON AND LEE PROFESSOR: “Most hospital and insurer markets are now highly concentrated and non-competitive. Competition law has proved completely ineffective in stemming the growing concentration of market power in both provider and insurer markets over the past two decades. An outside force is necessary to introduce competition and choice, bending the price increase curve. This is what a public plan using the Medicare network offers.” [E-mail, 9/17/09]

TOM DASCHLE, FORMER U.S. SENATE MAJORITY LEADER: “One of the options under the expanded FEHBP should be a government-run insurance program modeled after Medicare, a proven and popular program. Together with traditional Medicare, this new program would have tremendous clout to bargain for the lowest prices from providers and push them to improve the quality of care. It also could take advantage of the administrative efficiencies, further lowering costs. (Medicare's administrative costs are significantly lower than those in those in the private sector.)” [IAF, 12/10/08]

ANDY STERN, PRESIDENT, SEIU: “Government already sponsors the Medicare program for seniors and people with disabilities, and workers and employers pay to support Medicare on a fairly progressive basis. Medicare is popular because its benefits are guaranteed and don't vary depending on where you live, its red tape and administrative costs are minimal, and beneficiaries have a wide choice of providers. In addition, private insurers have not been able to compete to deliver Medicare's guaranteed benefits on a consistent, cost-effective basis.” [IAF, 12/10/08]

DAVID BALTO, FORMER POLICY DIRECTOR, FEDERAL TRADE COMMISSION: “Trying to cure the epidemic of anticompetitive and fraudulent activity by health insurers with a little dose of regulatory reform is like trying to cure cancer with a band aid. Only a public plan, which will be dedicated to the public interest and not profits offers the promise of reversing the rampant harm that consumers have suffered from health insurers who wrote the book on how to exploit consumers.” [E-mail, 9/17/09]

ARINDRAJIT DUBE, RESEARCH ECONOMIST, UC BERKLEY: “A strong public option that can pool risk and set rates nationally will insert much needed competition in the health insurance market. Naturally, health insurance companies prefer protection from competition; but Congress should not.” [E-mail, 9/17/09]

TED MARMOR, YALE SCHOOL OF MANAGEMENT- PROFESSOR EMERITUS OF PUBLIC POLICY AND MANAGEMENT; ADJUNCT PROFESSOR AT HARVARD’S JFK SCHOOL OF GOVERNMENT: “In a world where new insurance regulations are needed to constrain the behavior of commercial health insurance firms, an exit option for Americans is crucial as well. After all, the case for reform is in good part the conduct of the present insurers.” [E-mail, 9/17/09]

# # #

Media representatives, interested in scheduling an interview with any of these experts can find their contact information at http://institute.ourfuture.org/healthexperts or contact Jennifer Ettinger 202-955-5665.

House Progressives To Release New Report That Backs Decision To Not Support Health Reform Without The Public Option

Alex Lawson — Thu, 06 Aug 2009 06:53:05 -0700

Featured Resources

• Jacob Hacker: "Public Plan Choice In Congressional Health Plans: The Good, The Not-So-Good, And The Ugly"

• Letter from 60 members of Congress to Secretary Sebelius demanding a strong public health insurance plan

Additional Resources

• Institute for America's Future Public Health Insurance Resource Page

• Fight the lies with our Health Reform Fact Check here

• Jacob Hacker: "Healthy Competition: How to Structure Public Health Insurance Plan Choice to Ensure Risk-Sharing, Cost Control, and Quality Improvement"

• Jacob Hacker: "The Case For Public Plan Choice in National Health Reform: Key to Cost Control and Quality Coverage" (PDF)

• Jacob Hacker: "Health Care for America" report and the Lewin Group cost analysis

• Diane Archer: Massachusetts Health Reform: Near Universal Coverage, But No Cost Controls or Guarantee of Quality, Affordable Health Care for All (PDF)

• Frank Clemente: "A Public Health Insurance Plan: Reducing Costs and Improving Quality" (PDF)

• The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way

• Experts Agree that a Public Insurance Option is Critical to the Success of Obama’s Health Reform Proposals

Download The Full Report Here

WASHINGTON – Rep. Raul Grijalva, D-Ariz., and Rep. Keith Ellison, DFL-Minn. joined health care expert Jacob Hacker and Campaign for America’s Future co-director Roger Hickey on a conference call today to explain why a strong public plan is critical to making health care affordable, driving competition and guaranteeing Americans quality affordable health care.

Professor Hacker detailed the reasons why growing blocs of House members refuse to support a health care bill without a public insurance option. Hacker highlighted the “enormous flexibility” of supporters of reform and explained that the “public plan is not a litmus test” but rather a “crucial part of an overall reform package,” giving people the choice they are calling for, controlling costs and driving innovations.

“If anyone has a litmus test, it’s the right. Anything that challenges the hegemony of the private plans is bad,” in their view. But private insurers “got us into this mess” and they should not get to decide the terms of reform, said Hacker.

Hacker added that health insurance cooperatives— a new private option likely to come out of the Senate Finance Committee— are a “political solution to a political problem,” in sharp contrast to a public health insurance option, which is a policy solution to a real-world problem.”

Congressman Grijalva, co-chair of the progressive caucus, emphasized that health insurance cooperatives are “a way to silence a pretty strong drumbeat for a public option in the country.” To hand the same private insurance industry a trillion more dollars “is not worth the votes.”

Congressman Ellison stressed that the Progressive Caucus will not allow the House to pass a bill without a strong public plan. “We've got 60 members who will not vote for a plan without a public option. People opposed to the public option are siding with big insurance industry bosses against the American people.”

The speakers agreed that all the bills out of committees and moving to House and Senate votes are strong, providing an affordable choice to Americans without employment-based coverage and health security.

Dr. Hacker’s report details how a strong public health insurance plan is critical to successfully achieving the goals of national health reform—lower costs, higher quality and guaranteed health security for all Americans. The paper evaluates the different proposals for health reform advancing through Congress for their potential to satisfy the president’s goals for health reform and why insurance cooperative are not a substitute for a public plan.

Download The Full Report Here

Progressive Revenue Options to Fund Health Care Reform

OurFuture.org Staff — Wed, 24 Jun 2009 09:52:00 -0700

Health Insurance Coverage Keeps Shrinking as Premiums, Family Costs Climb Even Higher

Terrance Heath — Mon, 22 Jun 2009 22:18:14 -0700

Skyrocketing premiums and out-of-pocket medical costs are battering family budgets, eroding U.S. competitiveness in the global economy and threatening the American standard of living, once the envy of the world. As President Barack Obama and his economic advisers have repeatedly said, health costs are increasing at an unsustainable rate, and the national economy will not thrive unless they are reined in. Health care reform that guarantees quality, affordable care for everyone in the United States — and offers the choice of a public health insurance plan — can do what our private health insurance system has failed to do: provide economic security for families and the nation.

An overwhelming majority of Americans say they agree. A new survey sponsored by the independent, nonpartisan Employee Benefit Research Institute shows 83 percent of Americans support the public health insurance plan option — despite relentless, misleading attacks by a vocal minority in Congress who misrepresent the concept and the positive impact of a public health insurance plan. Half-measures, such as those being proposed by self-interested opponents of authentic health reform, will not provide Americans with health security or enable them to afford the care they need.

This report documents the irrefutable conclusion that health care and health insurance are becoming increasingly unaffordable for a growing portion of the U.S. population.

» Read the full report

Health Insurance: Unaffordable Now, And Destined To Get Much Worse

Mouse over each state to see the percentage of median income absorbed by employer-sponsored insurance in 2006, and what that percentage would be in 2016 without a change in policy.
Click a state and the document icon to get the full report. Increase in cost of insurance
as share of median income,
from 2006 to 2016
   70% and lower
   71% to 85%
   86% to 100%
   101% to 115%
   115% or higher

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Health Care Reform Recommendations

To ensure health care reform guarantees everyone will have access to quality, affordable health care, Health Care for America Now (HCAN), a national coalition of more than 1,000 organizations, makes the following recommendations:

For families purchasing health insurance, subsidies based on the federal poverty level must be regionally adjusted to account for drastic cost-of-living variations among urban and rural areas.
Individuals, employers and government have a shared responsibility to contribute to the cost of extending affordable health coverage to everyone.
The government should not tax employer-sponsored health insurance benefits.
Benefit packages should be comprehensive and defined as a benchmark for all insurance plans.
There should be no annual or lifetime caps on benefits payable by a health insurance plan.

Highlights:

In the last nine years, the cost of health insurance has risen 120 percent while wages grew only 29 percent. Health insurance premiums have risen so high that experts forecast 52 million Americans will be uninsured next year.
The lack of health insurance coverage causes 22,000 deaths each year in the U.S. People without health insurance are more likely to delay medical care, to get less care and to die when they get sick.
Among the uninsured, 80 percent are employed. Total health insurance premium contributions and cash outlays for an average family of four climbed 7.4 percent this year to $16,771.
The average combined cost of health insurance premiums paid by employers and workers climbed to $12,680 for family coverage in 2008.
The number of Americans in families with problems paying medical bills in 2007 climbed to 57 million, or one in five, up from one in seven in 2003.
Since 2004, employees have seen their cash outlays for health insurance co-payments and deductibles climb by 40 percent. The monetary value of employer-based health benefits declined from 2004 to 2007 as American families were required to spend more of their own money.
Health insurers have resorted to saving money by limiting benefits, using maneuvers such as imposing sharply higher co-payments on expensive drugs needed to treat life-saving diseases.
In bankruptcy courts, 62 percent of filers said medical bills contributed to their debts in 2007.
About 45 percent of Americans say they are "very" worried about having to spend more on health insurance premiums and medical costs.
Enrollment in low-premium, high-deductible health insurance products known as "consumer-directed health plans" rose to 8 million as more companies herded workers into the coverage whether they wanted it or not.

Health Insurance Coverage Keeps Shrinking as Premiums, Family Costs Climb Ever Higher

Alex Lawson — Sat, 20 Jun 2009 21:21:03 -0700

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How to Structure a "Play-or-Pay" Requirement on Employers

Terrance Heath — Mon, 15 Jun 2009 22:16:40 -0700

President Obama has made health care reform a top priority, and Congress expects to pass a bill this year. All of the proposals under serious consideration are "hybrid" approaches, designed to build on the current system of job-based coverage while providing health insurance to all Americans, including those who are not offered it through their place of work. These proposals are often termed "shared responsibility" approaches, because they envision joint contributions by the public sector, individuals and employers. Individuals pay for coverage on a sliding scale based on income with public subsidies for low- and middle- income families. But employers also continue to be responsible for crucial aspects of financing and managing coverage.

In the hybrid health reform proposals under consideration in Congress—as in California in recent years—employer responsibility generally takes the form of “play-or-pay.” Firms that do not directly provide health care to their employees (or “play”) are required to “pay” into a public pool. Play-or-pay is distinct from what we call “play-or-penalty,” in which firms that do not directly provide health care are fined for their noncompliance but those fines do not directly fund their workers’ coverage. In play-or-pay proposals, employer contributions are not penalties for failure to provide insurance, but a financing source for the insurance coverage of their workers, whose enrollment in the public pool flows directly from the employers’ decision to contribute.

Even within the broad play-or-pay approach, however, many key design choices remain. How Congress resolves these choices will not only shape the constraints and opportunities that employers face; it also has important implications for other strategic aspects of health care reform: how people will be enrolled, how subsidies will be administered, how many people will continue to have employer-sponsored coverage, and so on. And, of course, employer requirements raise important political issues as well. Yet how employer requirements should be structured has received relatively little attention in the current debate, and the experience of states like California that have considered such requirements have been only superficially discussed.

This policy brief examines the policy design, economic effects, and political ramifications of employer requirements. We focus in particular on what Congress can learn from the California experience, as well as from an independent cost and coverage analysis of the “Health Care for America” proposal—a national play-or-pay plan closely resembling current legislative initiatives that was developed by one of us (Hacker) with the support of the Economic Policy Institute. We begin in Part I by reviewing the key reasons for having a play-or-pay requirement. In Part II, we provide a set of recommendations, drawn from the California experience and the “Health Care for America” plan, for navigating the design and political issues raised by national play-or-pay bills. Finally, Part III examines the economic effects of an employer requirement. We conclude that the potential negative effects are modest, are outweighed by potential benefits, and could be easily addressed in the design of the requirement itself.