The public health insurance plan proposed under the House healthcare reform bill (H.R. 3200) would have "a substantial price advantage" over private insurance because it would pay providers using current Medicare payment methodology, according to an analysis of the House healthcare reform bill (H.R. 3200) released by The Lewin Group this week.
In particular, hospitals that accept Medicare and public plan reimbursements would see their payments for services reduced by an average of 32% below what private insurers pay for the same treatment, while physicians would see a 16% drop for their services, according to The Lewin Group, which is part of Ingenix, a wholly owned subsidiary of UnitedHealth Care. The physician payment reflects an additional 5% increase in payments under the House bill for physicians and other providers who agree to treat both Medicare and public insurance plan patients.
The Lewin report disagreed with the Congressional Budget Office about its cost estimates associated with the House bill's public plan option. In particular, it said that the CBO assumed that the public plan would only be about 10% less costly than private coverage: The Lewin Group said it estimated that the public plan would be able to "offer an insurance product that would be 20% to 25% less than what comparable private insurance coverage would cost"--primarily, because the plan would pay providers "substantially less" than private plans.
If a health exchange was opened to all firms with a public option, Lewin estimated that the number of uninsured people would be reduced by 32.6 million people (from about 49 million in 2011). Enrollment in the expanded Medicaid program would increase by 12.6 million people, which would include about 15.5 million newly enrolled people minus about 2.9 million current enrollees who would become covered by employers who would offer coverage in response to the bill's employer mandate to provide insurance.
The Lewin analysis examined two scenarios that would result from decisions by Commissioner of Health Choices, who would determine (as proposed under the House bill) who is eligible to participate under the health exchange with a public plan option. In the first scenario, the commissioner would limit eligibility to individuals and employers with fewer than 20 workers. In the alternative scenario, the commissioner would permit all individuals and employers to enroll.
"Our independent study shows how the decision whether or not to include all employers in the public option will have a profound impact on the costs of this legislation on government, employers and families," said John Sheils, vice president of The Lewin Group, in a statement.
According to the report's predictions:
- Public plan enrollment would be 33.6 million if the exchange was open only to small firms, and 103.4 million if the exchange was open to all. (This would be a 48.4% reduction in the number of people with private insurance, which is currently 172.5 million people, the report noted.)
- Private plan enrollment would decrease by 34.9 million if the exchange was open only to small firms, and decrease by 83.4 million if the exchange was open to all.
Family health spending would tend to increase under the House bill for the uninsured, the report said. Those families with one or more uninsured members would see their health spending increase by an average of $1,272 per family--assuming all workers have access to the public plan through the exchange.