New Study Raises Questions about Government-Run Public Insurance Plan

A government-run public health insurance option for middle-class families could help cover the uninsured, but it may well put private insurers out of business, a respected consulting firm concluded in a study released on April 6.The report by the Lewin Group, a public policy firm that serves government and private clients, stated the outcome of a public health insurance system depends on details that lawmakers are far from deciding. Nonetheless, the report could provide ammunition for critics who say a public plan would move in the direction of government-run medicine.President Obama and many Democrats want to create a government insurance plan to compete with private plans that now cover about 170 million Americans. The issue is a major sticking point for Republicans and the insurance industry.The Lewin study found that if such a plan were open to all employers and individuals and paid doctors and hospitals the same as Medicare, the government plan would quickly grow to 131 million members, while enrollment in private insurance plans would plummet.“The private insurance industry might just fizzle out altogether,” said John Sheils, a Lewin vice president and leading author of the study.By paying Medicare rates, the government plan would be able to set premiums well below what private plans charge. The study estimates that monthly premiums for family coverage would be $761 in the government plan, compared with an average of $970 in private plans. Employers and individuals would flock to the public plan to cut costs.President Obama has not spelled out in detail what he would like to see in a public plan. As a candidate, he said it would only be open to small employers, individuals and the self-employed. When Lewin ran the numbers for that limited scenario, the results were not as sweeping.A government-run public plan for small employers and individuals that paid Medicare fees would have nearly 43 million members. If it was designed like a private plan and paid higher fees to doctors and hospitals, it would only enroll 17 million members.The study found that a public plan would help reduce the number of uninsured to 28 million people, cutting the current uninsured population by nearly 50%, depending on how it was designed. The main reason not all the estimated 48 million uninsured would be covered is that President Obama’s health care proposal does not require all Americans to obtain coverage.Sheils said the study is meant to give lawmakers a feel for the options. “Our paper is more or less written as a ‘how to’ manual,” he explained.

Full Speed Ahead for Bill To Expand Eligibility for Cal-COBRA Coverage

The Assembly Health Committee has approved a measure (AB 23) that would expand COBRA eligibility to workers at California firms with fewer than 20 employees and forwarded the measure to the Assembly Appropriations Committee, the Los Angeles Times reports. The measure was introduced last week.

Currently, only workers at firms with at least 20 employees are eligible for health insurance coverage through COBRA, a federal law that permits laid-off employees to maintain the health insurance coverage they had through their employers so long as the laid-off workers cover the full cost of the premiums.

The bill, by Assembly members Nathan Fletcher (R-San Diego) and Dave Jones (D-Sacramento), would expand eligibility for California’s COBRA program, Cal-COBRA, and require health insurers to inform previously insured workers about a federal subsidy for COBRA coverage.

A provision in the federal economic stimulus package would subsidize 65% of the cost of COBRA coverage for some laid-off workers for up to nine months (Zwahlen, Los Angeles Times, 3/31).