No One Will Be Forced into the Public Plan. Period.

The title of this post isn’t my most frequently-typed pair of sentences this week – but it’s close.  So I’m going to type this up, put it up in the “Featured Posts” section so it’s easy to find, and be done with it.

The public health insurance option, as envisioned in the health care legislation that we’ve seen in the House and the Senate, would be one option out of many.  You’d have a range of qualifying plans, from Aetna to UnitedHealth, and “Plan USA” or “Community Health Insurance” or whatever they decide to call it will be listed alongside it.  Same subsidies, same rules of the road, same basic benefits (which standard is actually set by the private insurance marketplace – as in “equivalent to the average prevailing employer-sponsored coverage”).  It’s one out of many options – most of them private.  Nevertheless, the persistent myth that gets kicked around is that unless you have benefits through your employer, you’ll get the public plan.  There’s a secondary persistent myth that the public plan is tantamount to single-payer.  Believe me, no one will quickly set you straight on that point than an advocate for single-payer!  (By the way, if you are advocate for single-payer, you might want to stop reading now.  The rest of this post is probably just going to make you really, really angry all over again that a plan that basically coddles for-profit insurance is what’s moving in Congress.)

In the past, I’ve tried to refute that by pointing out the logical fallacy – that if you choose to go with a plan with a cheaper rate and better quality, you’re not being forced to do anything.  You’re just being a smart consumer (wassup, Free Market Boyz!)  If you want to be a dumb consumer and buy from WellPoint, no one stops you.

I’m still getting the question, though, so let me try a simpler argument – math.

It’s not even fancy math.  It’s subtraction.

Simply put, there are exactly zero studies that show the public plan coming putting private insurance out of business.  Not the Lewin Group, not the Commonwealth Fund and, most important, not the CBO.

Let’s start with Lewin – which I’ll quickly mention “is wholly owned by UnitedHealth Group, one of the nation's largest insurers.”  Lewin’s vision of the public plan is twofold – 1.) what if it’s open to all individuals and business, a configuration that no body of Congress has proposed, and 2.) what if it’s open to uninsured individuals and small businesses, the configuration envisioned in the Senate HELP bill and for the first few years of the House bill.  If it’s 2 – the version actually in pending legislation, private plan enrollment would decrease by 83.4 million.  Does that seem like a lot?  Well, in 2006-2007, there were 159.3 million people in employer-based insurance.

159.3 million
-  83.4 million
75.9 million people who would still have private insurance, in the rosiest of scenarios for the public plan.

Suffice to say, when you get closer to what’s in the bill, the argument becomes even less conclusive.  Lewin Group says that option 1 – the one that actually bears resemblance to what’s in the legislation -- would decrease private plan enrollment by 34.9 million, leaving 124.4 million people in private insurance.  Anything that leaves 78% of people right where they are is a pretty crummy attempt to force anyone to do anything.

But the Lewin Group can say what they want – the real umpire is the Congressional Budget Office.  Their analysis is not ambiguous.  The House bill's version of an Exchange with a public plan would actually lead to a net increase in people enrolled in private insurance, including employer-based coverage:

All told, we estimate that, in 2016, about 9 million people who would otherwise have had employer coverage would not be enrolled in an employment-based plan under the proposal.

The net effect of the proposal on employment-based health insurance reflects larger changes in the other direction, however. We estimate that about 12 million people who would not be enrolled in an employment-based plan under current law would be covered by one in 2016, largely because the mandate for individuals to be insured would increase workers’ demand for insurance coverage through their employer. On net, therefore, about 3 million more people would have their primary coverage through an employer [emphasis mine] under the proposal than under current law...

And why doesn’t the public plan force all of the U.S. into its low-administrative-cost arms?  Because the barriers to entry are so low (individuals and microbusinesses) that CBO just doesn’t see more than 10 million people signing up.

So if you think that you’ll be forced to have the public plan if you don’t want it – I’m sorry, your numbers don’t add up.

And by the way, this is a phenomenally frustrating post to write.  To have to point out basic arithmetic is rubbing my nose in how week the proposal for the public plan is compared to what Jacob Hacker once dreamed up and what Obama, Edwards and Clinton ran on.  The proposals for the public plan in legislation haven’t been gutted, but they’ve been severely hampered.  Only individuals without insurance and employees at small businesses will even be eligible for at least three years, and possibly longer.  Our legislators have catered so much to those on the “If you like your coverage, you can keep it” end of the spectrum, that those who don’t like their coverage are high and dry.  More to the point, as the CBO has scored, even this weak public option is a cost-saver as part of the total health care reform package.  Even tying one hand behind its back, it gets the job done.

How much money would we be saving -- and how many more customers fed up with their insurance plans would finally have an option -- if we’d allowed it to be strong?

(Photo credit:  Patrick Haney on Flickr.)