President Barack Obama promised to offer consumers a "public option" to
the private insurance market. Giving every American the option of
joining Medicare regardless of age is the best way to keep that
promise.
COST
• A recent detailed report by the Congressional Budget Office (CBO)
comparing health care reform options found allowing Americans to buy
into Medicare before turning 65 would lead to more people with health
coverage and lower costs than private insurance coverage. The CBO
estimated that a Medicare buy-in just for those between 62 and 64 years old
would cost $7,600 year per person, including drug coverage. A comparable policy on
the private market costs $12,000, and is, unlike Medicare, available
only to the healthiest seniors. If Medicare also covered the young, the
estimated cost per person would plummet. Children in federally
subsidized plans cost about $2,300 a year (including dental), and
younger adults fall in the middle.
LEARN MORE: http://www.cbo.gov/doc.cfm?index=9925
• A study by U.C. Berkeley found that a public option like Medicare could
result in $1 trillion in national savings over ten years by driving
down costs, improving efficiencies and fostering innovation. The study
noted that premiums for a public plan cost about three-quarters the
amount for private insurance.
LEARN MORE: http://www.law.berkeley.edu/chefs.htm
• Competition with a low-overhead health insurance alternative provided
by Medicare will force private insurers to prove that they can be
cost-effective while offering similarly comprehensive coverage. Since 1994 there have been over 400 health care mergers.[1] The insurance business today is dominated by a small group of large companies. Two insurers dominate a full one-third of the national market, while just four companies—WellPoint Inc., UnitedHealth Group, Aetna Inc. and Cigna Corp.—provide coverage to about half of Americans with insurance.[2]
• Medicare is far more efficient than for-profit health insurers. Medicare administrative overhead costs (2%) are well below the overhead of large companies that are self-insured (5-10%), health insurers offering coverage to small employers (25-27%), and individual insurance (40%).[3] The Congressional Budget Office and the General Accounting Office
have found that compared to the administrative costs of Medicare (2%), for-profit health
insurers offering coverage in "Medicare Advantage" plans spend up to 16.7% on profit and overhead.[4]
• According to health analyst Jacob S. Hacker, Ph.D. of U.C. Berkeley
School of Law: "It is widely recognized that major efforts are needed
to improve the quality and cost-effectiveness of medical care. No
sector of American health care is immune from responsibility for these
problems, or exempt from the challenge of fixing them. Yet Medicare has
been a leader in trying to reform the system, and in partnership with a
new public plan for nonelderly Americans, it could lead the way in
spearheading quality improvements in both the public and private
sectors.
LEARN MORE: http://www.law.berkeley.edu/chefs.htm
• Some have proposed allowing Americans to buy the same coverage available to members of Congress. However, the federal employees’ plan is run by private insurers and as a result, less efficient than Medicare. Under the federal employees program, the administrative costs of Preferred Provider Organizations (PPOs) average 7%, not counting the costs of federal agencies to administer enrollment of employees. Health Maintenance Organizations (HMOs) have administrative costs of 10-12%.[5]
QUALITY
• AARP has found that 80% of people with Medicare are either "extremely" or "very satisfied" with their health care and access to physicians, a higher rate than for 50 to 64 year olds with private insurance.[6]
• According to health analyst Jacob S. Hacker, Ph.D. of U.C. Berkeley School of Law: "It is widely recognized that major efforts are needed to improve the quality and cost-effectiveness of medical care. No sector of American health care is immune from responsibility for these problems, or exempt from the challenge of fixing them. Yet Medicare has been a leader in trying to reform the system, and in partnership with a new public plan for nonelderly Americans, it could lead the way in spearheading quality improvements in both the public and private sectors.
LEARN MORE: http://www.law.berkeley.edu/chefs.htm
ACCESS
• Access to medical care under Medicare is stable. 97% of physicians are accepting new public Medicare plan patients-virtually the same rate as are accepting private PPO patients-with 80% reporting they accepted all or most patients.[7]
• Elderly Americans with Medicare report that they have greater access to physicians for routine care and in cases of injury or illness than do the privately insured.[8]
LEARN MORE: http://www.medpac.gov/documents/Mar08_EntireReport.pdf
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[1] Edward Langston, “Statement of the American Medical Association to the Senate Committee on the Judicary, United States Senate” (September 6, 2006). Testimony.
[2] Los Angeles Times.
[3] Cathy Schoen, et al., "Building Blocks for Reform: Achieving Universal Coverage With Private And Public Group Health Insurance," Health Affairs, Volume 27, No. 3, May/June 2008, 647.
[4] Kevin Freking, "Medicare Insurers’ Profits Exceed Expectations," Associated Press, December 11, 2008; Congressional Budget Office, "Designing a Premium Support System for Medicare," November 2006, 12.
[5] Mark Merlis, "The Federal Employees Health Benefits Program: Program Design, Recent Performance and Implications for Medicare Reform," Henry J. Kaiser Foundation, May 2003, 7.
[6] AARP, "Access to Physicians Survey," Feb. 2007, 3.
[7] Medicare Payment Advisory Commission, "A Data Book: Healthcare Spending and the Medicare Program; Section 5:Access to Care in the Medicare Program," June 2008, Chart 5-3, 55.
[8] Id.
