Experts: Obama's 'Public Option' Insurance Will Abandon 100 Million Citizens

Tuesday, July 21, 2009 12:22 PM

By: David A. Patten


Up to 100 million people would lose their current healthcare plan within the next three years if Congress passes the "public option" health bill now making its way through Congress, policy experts tell Newsmax.

Defections on that scale would mean the death of the health-insurance sector within five years, a leading GOP congressman says.

These findings fly in the face of President Obama's assurances.

"Under our proposals," Obama told the American people during his July 18 weekly radio address, "if you like your doctor, you keep your doctor. If you like your current insurance, you keep that insurance. Period, end of story."

Not so, according to a report released Monday by the Lewin Group, a nonpartisan Falls Church, Va., firm that provides consulting services to the healthcare industry. The D.C.-based Heritage Foundation sponsored the study.

The study concludes that, although the government won't actually order people to leave their private insurance plans, it will induce their employers to do so. The taxpayer subsidies in the public option will tilt the economic scales so much that employers and individuals will abandon the private insurance market by the millions, the Lewin Group study indicates.

Rep. Tom Price, R-Ga., an orthopedic surgeon and senior ranking Republican on the Health subcommittee of the House Education and Labor Committee, tells Newsmax the imbalance will kill private health insurance as it currently exists in less than a decade.

"I don't see how it can go longer than somewhere between three and five years," Price tells Newsmax. "The phase-in makes it so that we'll see tens of millions go from private plans to the government-run plan within a year or two. And then five years is the drop dead date where everybody is forced off."

The mainstream media is beginning to question Obama's presumptions as well.

ABC senior White House correspondent Jake Tapper writes on his Political Punch blog that the president has admitted his statement is not literally true.

The government "might create circumstances" that would lead to a widespread change in policies, Tapper writes.

"I can't pass a law that says, 'I'm sorry, employers, you can never make changes to the healthcare plans that you provide your employees," Obama recently told ABC's Diane Sawyer. "What I can say is that the government is not going to force . . . your employers or you to join a government plan, for example."

Tapper reports that Obama later appeared to hedge on his promise during ABC News' healthcare forum, saying: "If you are happy with your plan, and if you are happy with your doctor, we don't want you to have to change."

Yet that is exactly what would happen to tens of millions of policyholders if Congress passes the current plans, Lewin Group and other experts say.

Obama has justified the public option as a means of policing private insurers, saying it "will keep them honest and help keep prices down."

The reality, critics say, is that Obama's proposal would go far beyond that, possibly even driving the private health-insurance sector out of business altogether, at a time when the economy already is closing in on 10 percent unemployment.

The Lewin Group appears to support Rep. Price's conclusion that public-option healthcare will bring radical changes to voters' health insurance coverage.

That consultant's analysis finds that the average monthly premium under the public option would be $179 less than the average private premium.

Lewin's analysts calculate that this would induce 83.4 million Americans and their employers to change plans. Because the employers usually make the decision, millions of those individuals would have little or no say in whether they would join the public-option plan.

Lewin concludes that 103.4 million Americans would sign up for the public plan, cutting the size of the private-insurance market just about in half. In three years, 48.4 percent fewer people would be covered by private insurance.

"The president simply isn't telling the truth," Price charges. "I don't know if that's because he hasn't read the bill, or he doesn't know what his cohorts up here on Capitol Hill have done to the legislation, but it's very, very clear."

He adds, "This will destroy the individual private insurance market in this nation. And if you talk to the folks who authored the plan, they admit it. They aren't trying to hide that at all. It's just the President who's trying to hide that."

One reason that healthcare policy experts cite for the profound impact the public-option would have on private insurers is "cost shifting."

Hospitals and physicians now defray the cost of the billions of dollars of free medical care they provide to uninsured people � known as "uncompensated care" � by increasing their fees to private health plans. As the number of people covered by private plans diminishes, fewer policyholders remain to absorb the cost of uncompensated care, which raises their premiums and results in an ever-narrowing base of privately insured.

"It�s a death spiral," Price tells Newsmax, "because as you take people out of personal insurance market then you are decreasing the number of individuals for whom risk is spread across. As you do so, the cost increases for each individual that remains in the private market. With the bill, you get to that point relatively quickly."

Advocates of the bill maintain, however, that by boosting the level of healthcare enrollment to about 95 percent of the populace, uncompensated care should diminish drastically. So far, the president's biggest hurdle comes from members of his own party, who are nervous about projected budget deficits and a surtax of up to 8 percent on the wealthy that would be used to reduce the plan's estimated budgetary impact of more than $1 trillion over the next decade.

"Congress needs to strive for a bill that's deficit-neutral over the long term, even beyond 10 years. All the bills so far have run deficits in the first 10 years, and would likely run massive deficits in following decades," senior Heritage analyst Brian Riedel tells Newsmax.

Riedel voices open skepticism about current projections for the plan's impact on the deficit: "The healthcare estimates are almost certainly underestimating the cost of health care. For starters, government healthcare programs almost always cost substantially more than is projected," he says.

"In this instance," Riedel adds, "many are assuming that the public plan will create all of these efficiencies that hold down costs, and I'm not sure that's going to happen. Additionally, there's always a chance that taxpayers are going to be asked to subsidize the public option, in order to give it a competitive advantage over private health care. That will raise the cost as well."

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