Blog Debate: Costs Savings Through Coverage and Competition
Editor's Note: Joining us this week for a blog debate about what approach we should take on health care reform in 2009 will be Dr. Don McCanne, a retired family physician now serving as Senior Health Policy Fellow for Physicians for a National Health Program, and Jason Rosenbaum, a writer and activist, and the Deputy Director of Online Campaigns for Health Care for America Now! Dr. McCanne will be presenting the "single-payer" point of view, and Mr. Rosenbaum will be presenting the "public competitor" point of view. I will be moderating and asking questions to both of our experts-- including a question that was submitted by one of you!
This answer by Mr. Rosenbaum is in response to the question: “How does your solution help us get the runaway train that is the cost of health care in this country under control?”
As President Obama said last week at the White House Health Care Summit, quoting Health Care for America Now's National Campaign Director, Richard Kirsch, "We can't have a false dichotomy between coverage and costs." If we are serious about lowering costs, we also must be serious about bringing everyone into the health care system.
When you have no health insurance, primary and preventative care is often not an option, leaving you with expensive emergency care. The plans President Obama, Senator Max Baucus, and Health Care for America Now are supporting cover everybody by allowing them a choice between keeping the insurance they have or opting for a new public health insurance plan that is open to everyone and made affordable based on a family's ability to pay, in addition to regulation on the insurance industry to force them to end their bad practices like habitually dropping expensive customers. By covering everyone, preventative and primary care will become accessible and can be incentivized, producing cost savings.
Cost savings will also be realized by sheer competition. In our plan, the public health insurance option competes on a level playing field with private insurance, driving both to be more efficient. As Jacob Hacker, a key architect of our plan, argues:
A public plan, says Hacker, is "a prerequisite for substantially improving the quality and effectiveness of American medical care." Private insurers keep their claims and effectiveness data proprietary. They argue that the data amounts to a trade secret: It is what they use to glean analytical insights and better their product. Releasing it would deprive them of competitive advantage. Medicare, conversely, shares its records, and they've been responsible for some of the most important health policy insights in recent years.
Competition between public and private plans could actually be more efficient than either system alone, as each could function in a way to keep the other honest.
A public health insurance option's overhead costs, if they are in line with Medicare's 3%, will be much lower than private insurance, which is more like 10-25%, saving taxpayers money. According to the Institute for America's Future report by Jacob Hacker, we could save $46 billion per year this way [pdf].
Finally, the public health insurance option would drive down cost using its bargaining power to negotiate better prices from providers and drug companies, much like Medicare has in the past.
Overall, according to a Lewin Group analysis of our plan, we could realize $1 trillion in savings over 10 years.
This is a significant savings. By covering everyone in this way, we will "bend the curve" of our health care costs, getting them under control so they don't continue taking up more and more of our GDP.
Next:
Dr. Don McCanne of Physicians for a National Health Program responds.
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