Experts: Public option wouldn’t expand health coverage much

Kaiser Health News

WASHINGTON — For all the controversy over a government-run insurance option, the program outlined in pending health overhaul legislation likely would play a minuscule role in efforts to expand health-care coverage, according to many health-care experts and lawmakers.

Of the 45 million uninsured Americans that congressional Democrats and President Barack Obama want to help over the next decade, only 6 million, or 13 percent, would obtain coverage by enrolling in a public option, the Congressional Budget Office concluded in an analysis of the Democratic bill pending before the House of Representatives.

That number could shrink because states may decide to opt out of a public insurance plan, an escape clause that’s likely to be included in the Senate plan.

“The politics of this issue is totally disproportionate to its likely impact one way or another,” said Bruce Vladeck, a former administrator of the federal agency now called the Centers for Medicare and Medicaid Services.

Senate Majority Leader Harry Reid, D-Nev., has said that the Senate overhaul bill would allow states to opt out of the public plan — a step that political experts say at least some states likely would take. Congressional Republicans are united in opposition to a government-backed insurance plan, and political leaders in heavily GOP states may also be opposed. Insurers, which fiercely oppose a public plan, would also be expected to lobby against it.

No matter what the states do, the government-run plan is not likely to attract a large membership, at least according to CBO. It reasoned that the plan may not be able to offer a price advantage — in part because the House bill would require a government-backed insurer to negotiate payment rates rather than dictate them to hospitals and doctors.

If the number of people in the public plan turned out to be 6 million in 2019, that would work out to an average of 120,000 per state. But the number probably would be smaller in the smallest states.

Reid would allow states to opt out of the program by 2014, one year after the public plan would take effect. He hasn’t provided details on how such an opt out would work, or how the governors and the state legislatures might decide. Some advocates of the public plan fear that the states could end up with too much power to withdraw from a public plan, leaving residents with fewer health insurance choices.

Others say, however, that the opt-out clause would rightfully allow states to decide what’s best for their residents.

Predicting states’ response is tricky, even where Republicans and conservative Democrats predominate. Some say that the consumer appeal of a public plan could trump criticism that government plans would eventually drive out competition and lead to the federalization of health care.

Congressional Democrats say that a government plan would spark competition with private insurers in the exchanges, or marketplaces, where under the legislation millions of Americans who don’t have employer-provided coverage would shop for policies. Advocates say that could especially help consumers in states — often smaller, more rural ones — where only one or two insurers dominate the market, and are typically lightly regulated.

Whether states would opt out of the public option would depend on several factors, including the political makeup of the state, the level of competition among insurers, and whether insurance companies push state officials to keep out a government-backed plan.