being considered by President Barack Obama and Congress could have
a devastating impact on private health insurers, concludes
consultancy The Lewin Group (TLW).
At worst TLW estimates that insurers could
loose up to two-thirds of their customers to a proposed public
health plan.
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TLW’s estimates are subject to a number of
assumptions, first being payment levels. If Medicare payment levels
are used in the public plan premiums would be up to 30 percent less
than premiums for comparable private coverage, noted TLW.
On average, the monthly premium in the public
plan for a typical benefits package would be $761 per family
compared with an average of $970 per family in the private market
for the same coverage.
Medicare is an insurance programme
administered by the federal government providing health insurance
to people aged 65 and over or who meet other special criteria.
TLW continued that if as President Obama
proposed, eligibility is limited to only small employers,
individuals and the self-employed, public plan enrollment would
reach 42.9 million people. If Medicare payment levels are used the
number of people with private coverage would fall by 32.0
million.
If private payer reimbursement levels are used
by the public plan, enrollment would be lower, with only 10.4
million people switching to the public plan from private
insurance.
From the perspective of the private health
insurance industry the worst outcome would be the public plan being
opened to all employers. This was proposed by former Senators
Hillary Clinton and John Edwards.
Under this proposal, at Medicare payment
levels TLW estimates that 131.2 million people would enroll in the
public plan.
The number of people with private health
insurance would decline by 119.1 million people.
This would be a two-thirds reduction from the
current 170 million people with private coverage. If the higher
private payer levels are used, TLW estimates that enrollment in
private insurance would decline by only 12.5 million people.
