CBO: Public Option Premiums Higher Than Private Plans

[Googly Moogly]

The public insurance option would typically charge higher premiums than private plans available in the exchange, according to the Congressional Budget Office analysis of the House bill.
That surprising conclusion raises doubts about Democratic promises that a government-run insurance plan would provide a lower-cost alternative to consumers. At the same time, it calls into question Republican charges that the plan amounts to government takeover of health insurance -- because only 6 million people would enroll in the plan, according to the CBO.
Here's the key passage from page 6:
Roughly one-fifth of the people purchasing coverage through the exchanges would enroll in the public plan, meaning that total enrollment in that plan would be about 6 million.
That estimate of enrollment reflects CBO's assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that "adverse selection" on the public plan's premiums would be only partially offset by the "risk adjustment" procedures that would apply to all plans operating in the exchanges.)

 

[djs]

Sorry, this makes almost no sense. I'm missing something.
Out of pocket is capped, deductibles are limited, and you cannot decline (or even rate???) for preexisting conditions.

So now, if I had a heart attack last week, decided it was time to get health insurance, why would I suddenly select the government plan if others were available cheaper?

Hmmm, this really doesn't make sense, but then, I'm probably missing something.

Dan

 

[Googly Moogly]

Don't worry most people will not be able to get it anyways.

Health care: Most wouldn't have public option

Carolyn Lochhead, Chronicle Washington Bureau
Thursday, October 29, 2009

(10-29) 04:00 PDT Washington - -- Senate Majority Leader Harry Reid's gambit to include a government-run insurance option in health care legislation has given a fresh tailwind to the idea despite opposition from conservatives.
But lost amid the ideological battle for or against a public option is a key overlooked fact: The vast majority of Americans would have no access to a public option even under its most expansive versions.
House and Senate bills limit the option to the smallest businesses and to individuals who cannot get insurance, or whose health care costs exceed 12.5 percent of their income. Even seven years into an overhaul, an estimated 90 percent of Americans, including nearly everyone who has employer-based coverage now, would be shut out of a public option.
Those currently in other government programs, such as Medicare and the Veterans Administration, also would be excluded.
The public option under all bills would be offered through insurance exchanges, a Web-based market for health plans. But most people who are unhappy with the insurance they have now would be locked out of these exchanges, leaving many Americans who are watching the debate in for a big surprise.
Only a handful of senators, such as Ron Wyden, D-Ore., and Mary Landrieu, D-La., have focused on widening the exchanges where a public option might be available. Wyden wants everyone who now has employer-based coverage to have access to the exchange if they don't like their insurance companies, but his efforts have been lost amid the narrower fixation on the public option itself.
"When you ask people in a poll, 'Are you in favor of a public option that would be available to everybody,' they say, 'Yes,' " Wyden said. "I don't think they're going to feel the same way about a public option available to only 10 percent of the population."
Wyden, an iconoclastic liberal, questioned the basic assumption by his fellow Democrats that such a limited public option will provide adequate competition to private insurers.
"People are going to want choices, public choices and private choices, available to everybody, because that's how you're going to hold the insurance companies accountable," he said. "You can't expect that having 10 percent of the American people getting the public option will force major changes with the other 90 percent who aren't subjected to choices, public or private."
He pointed to another surprise that awaits the public: Even those who would have access to a public option may not be able to afford it.
Citing estimates that a family of four earning $66,000 could pay an estimated 19 percent of its income on health care under some bill versions, Wyden said, "I can tell you, Americans are not going to consider 19 percent of their income affordable coverage."
Many health care experts agree. "I'm afraid rude surprises could be around a lot of different corners in this debate," said Marian Mulkey, senior program officer for the California Health Care Foundation, an independent philanthropy group based in Oakland.
Mulkey said the public option has been "dominating the discussion to an extreme extent" and that its importance as a principle to liberals and conservatives may outweigh its actual effect, at least in the short run.
A public program might face the difficulties private insurers have in holding down costs. "It's not entirely clear that just because it's a public program, it will be able to negotiate lower payments to providers or somehow develop more efficient benefits in a way that will yield a more affordable plan," she said.
Health care consultant Robert Laszewski, head of Health Policy and Strategy Associates in Washington, said that even if a public option is 25 percent cheaper than a private plan, which averages $13,000 a year for a family of four, it still will cost $10,000 a year.
Under subsidies in the House bill, a family earning $55,000 would pay the first $5,500 of any premium, public or private, he said.
"How many families earning $55,000 a year do you know that have an extra $5,000 in their checking account?" he asked.
Sen. Sheldon Whitehouse, D-R.I., a big advocate of the public option, acknowledged that most people won't have access to it. The exchanges were kept very narrow, he said, because of the way the Congressional Budget Office analyzes budget costs.
"We have to live with CBO's numbers and that creates some constraints," Whitehouse said. "I hope that quickly the public option will begin to demonstrate that those concerns were not justified and those constraints can be lifted and we can extend the option to everybody, because that's what makes sense."
Ironically, the power of the exchanges to dismantle the current system of employer-based health care, which many economists cite as the root source of exploding costs, could raise budget costs if more people move onto the exchanges and possibly into a public option.
But whatever effect a public option may have on the government's costs, there is little disagreement that giving individuals more choices - public or private - through the exchanges would inject powerful competitive forces into the system that could lower costs for everyone.

House to reveal overhaul today

After months of tense negotiations and setbacks, House Speaker Nancy Pelosi, D-San Francisco, will unveil a sweeping health care overhaul plan today, with a vote possible in the House as early as next week.
Pelosi is in an all-out push to move the legislation, which will have a government-sponsored insurance plan available to some people but not the "robust" version tied to Medicare rates that Pelosi and liberals favored.
Instead, it will have rates negotiated by the secretary of Health and Human Services, as swing-state "Blue Dog" Democrats preferred. Leaders are also working furiously to assure moderate Democrats that no public funds would be used for abortion.
House and Senate leaders have cleared the calendar for a possible weekend session Nov. 7 and another possible House session just before Thanksgiving, and canceled a planned Veterans Day break.
House Democrats said Senate Majority Leader Harry Reid's move to include a public option in the Senate bill Monday made it easier for moderate House Democrats to vote for a public option.
- Carolyn Lochhead

E-mail Carolyn Lochhead at [email protected].
Health care: Most wouldn't have public option
This article appeared on page A - 1 of the San Francisco Chronicle

 

[Winter_123]

The public insurance option would typically charge higher premiums than private plans available in the exchange, according to the Congressional Budget Office analysis of the House bill.
That surprising conclusion raises doubts about Democratic promises that a government-run insurance plan would provide a lower-cost alternative to consumers. At the same time, it calls into question Republican charges that the plan amounts to government takeover of health insurance -- because only 6 million people would enroll in the plan, according to the CBO.
Here's the key passage from page 6:
Roughly one-fifth of the people purchasing coverage through the exchanges would enroll in the public plan, meaning that total enrollment in that plan would be about 6 million.
That estimate of enrollment reflects CBO's assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that "adverse selection" on the public plan's premiums would be only partially offset by the "risk adjustment" procedures that would apply to all plans operating in the exchanges.)

This is interesting but actually powerful language in a bureucratic way. The CBO is basically acknowledging that the public option may potentially have lower administrative cost but this is offset by the costs that go with actually doing less adminiitration such as utilizaton review. In other words, even though there will be guaranteed issue there are still many, many instances where people will want to extensively game the system or overutilize as rationing sets in. And.....if you want to game the system there is no better place to go than a public program because no one is looking, much anyway. This in turn would drive private plan premiums up because it allows them to charge more but still be competitive with the public option.

Your private plan only allows one abortion per year and their computers are actually keeping track? Frig that. Get over on the "progressive" plan. Need a third one that year? Just tell them you are an illegal immigrant and dont care to give any identifying information.

Change you can believe in.

 

[somarco]

Letter from CBO Director Elmendorf to Charles Rangel on the cost of HR 3962

http://www.cbo.gov/ftpdocs/106xx/doc10688/hr3962Rangel.pdf

 

[Mac1958]

Doesn't matter.

The Democrats exist and operate on their maternal instincts ("We're the government, and we're going to mommy you whether you want us to or not"), and those instincts are on hyper-drive right now.

They're going to cram through as much bureaucratic control as they can, regardless of what anyone says. "For our own good."

Elections have consequences.

...