Saturday, July 3, 2010

Public Health Insurance is Possible Under Obama

With rising health care costs, it is a relief to know that the Democrats in Congress are inching towards health reforms that would include public health insurance. Public health insurance works very much like private insurance policies, except that it is the federal government, and not an insurance company, that would pay for all your claims. President Barack Obama had revealed this plan during his campaign period.
But how will public health insurance affect the entire United States?

Those opposed to public insurance option are understandably wary that it would put private health insurance companies out of business. While there are some people who would not be upset about driving insurance companies out, the prospect of a virtual monopoly in health insurance is making many Americans a little nervous.

Lewin Group, in a recent study, confirms that a public health insurance policy could force private insurers to fold up by offering deeply discounted premiums. However, the potential for their doomsday really depends on how well public healthcare plans are received by the public, or who is eligible for such a healthcare option.
Key findings in Lewin's study include:

  • If the public healthcare insurance plan uses Medicare payment levels, the premiums significantly less (up to 30 percent) than the comparable coverage by private companies. Hypothetically, a family would be spending $761 on a benefits package under a pubic plan, compared to $970 per family under private companies.
  • If eligibility is limited to small employers, freelancing individuals, and self-employed people, around 42.9 million people would enroll, while the number of people with private coverage would fall by 32.0 million. However, if the public plan uses the reimbursement levels of private companies, only 10.4 million people would switch to the public plan.
  • If the public health insurance plan is available to all employers, at Medicare payment levels around 131.2 million people would enroll, while the number of people with private health insurance would decline by 119.1 million. In effect, the private health insurance industry would suffer a two-thirds reduction in their business. There are currently 170 million people with private health care coverage. But if private payer levels are used, only 12.5 million people will switch to the public program.
  • Assuming all individuals and employers are eligible, net hospital revenues would fall by 4.6 percent or $36 billion, while physicians' net income would fall by 6.8 percent or $33 billion. If eligibility under the public plan is restricted to certain individuals and small companies, the net revenue of hospitals would actually increase by $11.3 billion because of an increase in the number of newly-insured individuals. However, the net income of physicians would decline by $3.0 billion.

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