New Government-Controlled Health Insurance System Means Unaffordable Costs

WASHINGTON – As some candidates and lawmakers are pushing new government-controlled health insurance systems like the public option and Medicare buy-in as “moderate” alternatives to Medicare for All, a new analysis reminds us that these proposals would burden American patients with unaffordable costs and threaten their access to quality care.

The new analysis, released by the American Action Forum (AAF), finds that a new government-controlled health insurance system known as Medicare buy-in would cost an additional $184 billion that American families can’t afford.  Even worse, the new system would decrease provider access by nine percent and would lead to a four percent decrease in medical productivity.

And a new study from FTI Consulting reveals a new government-controlled health insurance system known as the public option could eliminate consumer choice for millions of Americans and “eventually cause the elimination of all private plans in the individual market.”  The study finds:

• After the first 10 years of the public option, more than seven million current enrollees would no longer have private coverage through the marketplaces – with two million of those enrollees being forced off their private plans as insurers exit the marketplaces altogether.

• The study also warns that the public option could eventually cause the elimination of all private plans in the individual marketplaces, eliminating choice for millions of health care consumers, even those with the resources or subsidies available to cover their preferred plan.

• In fact, the report finds that by 2050, 70 percent of state marketplaces (34 U.S. states) would no longer offer a single private insurance option.

• Rural families – millions of whom already find their access to quality care at risk – would be especially hard hit by the public option, the study warns, and could find few if any options available to them.

These new studies add to the growing consensus that so-called “moderate” fallbacks like the public option and Medicare buy-in would lead to the same results as Medicare for All: higher taxes, elimination of consumer choice and less access to quality care. 

The Wall Street Journal reports that new one-size-fits-all government health insurance systems like the public option represent “stepping stones to single payer.”  This fact has been acknowledged by journalists, analysts, Democratic presidential candidates and studies. 

• Dr. Scott Atlas of Stanford University explains, such a system would raise costs for families and “mainly erode, or ‘crowd out,’ private insurance, rather than provide coverage to the uninsured.” (Scott W. Atlas, “Public Option Kills Private Insurance,” The Wall Street Journal, 7/16/19)

• A study from KNG Consulting finds that a proposed new government-controlled health insurance system, could force one-third of American workers off of their current employer provided health care coverage, also known as employer-sponsored insurance (ESI).

“The public option would cause premiums for private insurance to skyrocket because of underpayment by government insurance compared with costs for services … A single-payer option is not a moderate, compromise proposal.  Its inevitable consequence is the death of affordable private insurance …  Massive taxation would be needed to expand Medicare, whether optionally or not.” (Scott W. Atlas, “Public Option Kills Private Insurance,” The Wall Street Journal, 7/16/19)

• The public option “could also lead to a 10 percent increase in premiums for the remaining pool of insured people.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)

• “[A] government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)

• “[A] government plan that attracted people with expensive conditions could prove costly.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)

A recent study, conducted by Navigant for the Partnership for America’s Health Care Future, also finds that the public option could put more than 1,000 rural U.S. hospitals in 46 states “at high risk of closure.”  These hospitals serve more than 60 million Americans, and as Kaiser Health News and NPR report, hospital closures can have “profound social, emotional and medical consequences,” while RevCycleIntelligence also reports, “[p]atient access to care suffers when a rural hospital closes its doors for good, and consequently, patient outcomes can deteriorate.”

• Another study by KNG Consulting found that “[f]or hospitals, the introduction of a public plan that reimburses providers using Medicare rates would compound financial stresses they are already facing, potentially impacting access to care and provider quality.”

• An earlier study by Navigant found that government-controlled health insurance systems such as “buy-in” or “public option” could force hospitals to limit the care they provide, produce significant “layoffs” and “potentially force the closure of essential hospitals.

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