Public Insurance Option Needed To Provide Affordable, Quality Health Coverage

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A new public health insurance plan that competes directly with private insurers is essential to controlling health care costs and improving the quality of care, according to a new report released today by the Institute for America's Future and the UC Berkeley School of Law's Center on Health, Economic & Family Security.

The report, by health care expert and UC Berkeley professor Jacob Hacker, says a public health insurance plan like Medicare offered together with private health plans could result in $1 trillion in national savings over ten years by driving down costs, improving efficiencies and fostering innovation.

President-elect Obama, his health care point person Tom Daschle, Senate Finance Committee chairman Sen. Max Baucusand House Ways and Means Health Subcommittee chairman Rep. Pete Stark, D-Calif., have all embraced the idea of adding a public plan to help fix the ailing health care system, but the insurance industry opposes a public option. New data in today's report provides fresh ammunition to this debate by showing how a public plan can maintain lower costs over time while providing broad, guaranteed and quality coverage.

Dr. Hacker released the report on a conference call with reporters today noting that the clearest evidence of the savings produced by a public plan is its premiums.

"Premiums with a public plan cost about three-quarters the amount private insurers charge for the same set of benefits," said Hacker. "It's an essential element to any national health care reform proposal."

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Hacker said that private plans operating without public insurance competition have been unable to contain spiraling health care costs and unwilling to cover at-risk patients. However, a public-private hybrid can provide an important check on both public and private sectors, ensuring flexibility, accountability and inclusiveness.

Rep. Stark agreed with Hacker on today's call, declaring that it's time we had an alternative plan that's driven by cost-controls and quality care, not private profit.

"A public plan is an important component of any health care reform," said Rep. Stark. "A public plan like Medicare would be more efficient and would provide greater choice. Without a public plan, insurance companies will have little incentive to control costs, reaping profits at the expense of beneficiaries."

Institute for America's Future co-director Roger Hickey joined Rep. Stark and Hacker on the call, noting that the national health care debate will center on the public insurance option.

"Public insurance as part of a comprehensive solution was fully debated in the 2008 elections," said Hickey. "People across the country believe public insurance is a common-sense choice that will help control health inflation and assure quality."

Hacker's report, "The Case for Public Plan Choice," clearly shows that public insurance has a better track record than private insurance at reining in costs while preserving access to quality services. A public plan is essential to set a standard against which private plans must compete. The report outlines how public insurance has pioneered new payment and quality-improvement methods that have often set the standard for private plans and how it has the potential to carry out these vital tasks even more effectively in the future, using information technology, large databases of practices and outcomes, and new payment approaches and care-coordination strategies.

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