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What is public health insurance

what is public health insurance

What's the issue?

A key issue in the health reform debate is how best to provide affordable, high-quality health insurance for an estimated 36 million uninsured U.S. citizens. Reform legislation in the U.S. House of Representatives and Senate proposes to accomplish that through several means, including expansion of Medicaid, the federal-state program for poor and low-income people; opportunities to buy private health insurance coverage through new insurance exchanges; and the alternative option of enrolling in a new public health insurance plan or plans that would also be offered through the insurance exchange.

On November 7, 2009, the House adopted its version of health reform, the Affordable Health Care for America Act (HR 3962). An analysis by the Congressional Budget Office (CBO) suggests that 6 million Americans would ultimately meet the specific eligibility requirements laid out in the bill and would choose to enroll in the public plan. The Senate is still finalizing details of its proposal, but the sponsors say a key difference from the House bill is that the Senate version would include a provision to allow states to "opt out" of offering a public plan.

In general, supporters believe that a public plan could bring new competition, choice, and accountability to the provision of

health insurance. Administrative expenses could be lower than for private insurers, and there would be no need to generate returns for shareholders; as a result, dollars spent on health coverage would stretch further. The House version of the public plan would negotiate payment rates with doctors, hospitals, and other providers, and supporters hope those rates could be lower than those paid by private insurers. The public plan would also be required to develop innovative payment mechanisms that could ultimately hold down the rate of increase in health costs.

Role of government: Opponents of a public plan argue that it would present unfair competition to private health insurers. Some provider organizations worry that by driving down prices, a public plan would reduce their ability to provide high-quality care. Employer and insurer organizations add that in order to maintain their revenues, health care providers might "cost-shift" by raising charges to employer-based plans. A public plan is also opposed by those who are concerned that it could unduly expand the role of government in health insurance and health care. Finally, there are also growing questions, on the part of both supporters and opponents alike, about how viable or effective the latest redesigned version of the public plan is likely to be.

Category: Insurance

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