Washington Post Lies About Public Plan and Medicare, Again

The Washington Post has again lied about a potential public option and about Medicare. David Hilzenrath wrote,

The issue of whether a public plan would be more successful at bringing costs under control is harder to evaluate. As a prototype for government-run health care, Medicare has failed to control costs and makes little effort to restrict care.

This a complete and total lie. Medicare has done a much better job controlling cost than private insurance. The Congressional Budget Office determined that Medicare Advantage, which is insurance for the elderly run by private insurance companies, almost always cost the government more than traditional Medicare. The cost of Medicare has increased at a much slower rate than the private market. A study by health policy expert Jacob Hacker shows that from 1997-2006 the private health insurance annual growth rate was 7.3% per enrollee, while for the same time period the Medicare growth rate was only 4.6%.

Almost all experts agree that a Medicare like public plan would be cheaper than private insurance. The Lewin Group, The Urban Institute, The Commonweath Fund, and the Congressional Budget Office all agree that a public plan structured like the one in the House bill would be cheaper than private insurance.

The reason the health insurance industry is so viciously fighting a public option is because they know it will be able to offer insurance at a lower price. Supporters and opponents of the public plan all agree that a public option would be cheaper than private insurance. To claim it is hard to evaluate if a public plan would control cost is untrue.

$2,500 A Year: The High Cost To You For Bipartisan Window Dressing

A study by the Lewin Group concluded that if individuals were allowed to buy into Medicare (or a new public health insurance option based on Medicare), it would save the average family of four $2,500 a year. You would receive the exact same level of benefits but for $2,500 less. Depending on how you structure the public option, the savings for a family of four could range from $2,500 to only several hundred dollars a year. The important point is that everyone agrees (supporters, critics, industry, analysts, politicians) that a real public plan would be cheaper than insurance from a for-profit insurance company.

Senator Grassley, along with eight other GOP senators, wrote a letter laying out a clear marker. If health care reform includes a public option, it will not get Republican support. They are demanding that Americans not be given a public health insurance option that would save them thousands of dollars as the price for “bipartisanship”. If health care reform is passed with bipartisan support (i.e. without a public option), it will cost you hundreds, if not thousands, of dollars a year.

Democrats have large margins in both the House and the Senate. The overwhelming majority of Democrats support giving Americans the choice of a public option that would save them money. They do not need a single Republican vote to pass health care reform. Having a few Republicans votes will only allow Democrats to claim that the bill is “bipartisan”. Bipartisanship is only political window dressing. It will do nothing to improve health care legislation or help the millions of Americans struggling with the cost of health care.

The question is how much the Democrats will make you pay so that they can claim their bill is bipartisan. How much money will it cost you, so that they can get a political talking point and a nice photo op? If Democrats kill or cripple the public option to gain the support of a handful of Republican votes, they will be forcing you to pay $2,500 more a year simply for political window dressing. How high will the "bipartisanship tax: be?

Senator Grassley Lies About Public Option

Senator Grassley, along with eight other Republican senators on the Senate finance committee, sent a letter to President Obama voicing their opposition to creating a public health insurance option. In their letter they dramatically misstate the conclusion of a study by the Lewin Group.

The letter states, “actuaries at the Lewin Group ave concluded that such a plan open and offering Medicare-level reimbursement rates, would result in 119.1 million Americans losing their private coverage. The term “losing” is a completely distortion of the facts.

The Lewin Group concluded that a public plan structure like Medicare would be dramatically cheaper than private insurance and as a result people would choose to purchase it instead. Saying that millions of Americans would “lose” their private coverage is like saying that satellite TV service has caused millions of Americans to lose their cable TV service. Individuals decided to abandon cable TV and choose satellite TV instead. They choose satellite because they preferred its services or its price. They did not lose their cable TV service.

The repeated pattern of Republicans lying and distorting the basic fact about the health care debate will make bipartisanship impossible. It is clear from their statements that Senator Grassley, and the rest of the GOP senators, have no desire to negotiate in good faith.

Will The CBO Be Used To Force A Strong Public Plan?

What is overlooked in all the talk about the creation of a public health insurance option is cost. Most of the debate has been centered on governing philosophy. There is reflexive disdain for the government running anything on the right and hatred of for-profit insurance companies on the left. But all this may not matter as much as what the Congressional Budget Office (CBO) has to say on the matter. Having a strong public plan could save the government billions, if not trillions, of dollars.

A Lewin Group study determined that a Medicare buy-in public plan's premiums would be 23% cheaper than private health insurance. That means a family of four would save $2,500 a year if they could sign up for a Medicare-like public plan. It's been reported that Ted Kennedy plans to introduce a strong public plan based on Medicare. It would use the same network and infrastructure but would pay doctors 10% more for services than Medicare. With Kennedy's payment change, the savings for a family of four would be slightly less but still substantial.

I reason to suspect that Ted Kennedy plans to use the CBO to make the case for a strong public plan. His health care reform bill will have some sliding scale of subsidies and/or tax rebates to help people buy insurance based on their income. If he is smart, he will tie the level of subsidies to the cheapest qualified plan (one that must meets all coverage critical), which would inevitably be the public plan.

For example, if the cost of the cheapest plan exceeds 10% of your after-tax income, the government will pay for the difference. (If the cheapest qualified plan cost $5,000, and your after tax income is $30,000, you get $2,000 to help buy health insurance). By tying subsidies to the cost of individuals' health insurance, it means offering a low cost public plan would make the whole health care reform legislation cheaper.

I think Ted Kennedy will have the CBO score his health care bill with his strong public plan and without it. If he uses a subsidy mechanism like the one I laid out, the plan with his public option should cost billions less a year. Using some back of an envelope calculations, I beleive having a public health insurance option would reduce the cost by roughly $20 billion in the first year, with even greater savings in subsequent years.

The divide in cost between private insurance and a public plan is expect to only grow in the coming years. According to a study by The Institute for America's Future, from 1985-2002 premiums for the Federal Employees Health Benefits Program (a model for a regulated health exchange without a public option) grow annually by 7.3%. During the same time period, Medicare (a model for a Kennedy's public insurance option) grow annually by only 5.8%.

Senator Grassley Doesn't Want You To Have Cheap Health Insurance Because It Would Make it Hard to Find Cheap Health Insurance

According to Radio Iowa, Senator Grassley recently addressed his constituents about health care reform. I'm glad to hear him claim that he is committed to getting health care reform passed this year. Yet, I'm very disappointed that he is determined to make millions of Americans continue to pay too much for health insurance.

At a local forum Grassley referenced a new study by the Lewin Group claiming, “It's quite obvious, if you have 119 million people opt out, you aren't going to have affordable coverage for those that are left in a private health care system”. From his statement I can only conclude Grassley trusts the accuracy of the Lewin Group study and therefore is against allowing Americans to save 30% on their health insurance.

The Lewin Group studies what the effect would be of allowing Americans to choose to buy private health insurance or buy a public option which would be modeled on Medicare. The study concluded that the public plan would provide cheap, low hassle, quality health insurance for a fraction of what private insurance costs. The public plan would be roughly 30% cheaper than a comparable private plan. The “problem”, as Grassley sees it, with the public plan is that it would be such a preferable product that millions of Americans and companies would love to voluntarily switch to it. Grassley is against the public plan because he thinks too many people would like it.

Let's make this very clear: Grassley believes that having public plan based on Medicare would allow Americans to choose an insurance option which would reduce their premiums by 30%. He is against the public plan for the reason that most Americans and companies want to save money and no longer be forced to do business with private health insurance companies. So what he was saying was: he against offering Americans guaranteed affordable, effective health insurance because it could possibly make it harder for Americans to get affordable health care from private insurance companies. Grassley must decide if he wants to help the American people save money or help the health insurance industry protect its profits.