Public plans pressure private pricing

Stethoscope lying on money

TEXT OF STORY

Bill Radke: The nonprofit group Families USA reports this morning the average family pays an extra $1,000 a year for health insurance to subsidize the uninsured. That's because doctors and hospitals charge insured patients more to make up for the care they give that doesn't get reimbursed. This report bolsters the argument of those who want to reform health care. The first big fight has already begun, as Marketplace's Steve Henn reports.


Steve Henn: Back in January, even former rivals seemed ready to work together to cover the uninsured.

Ad: Because quality affordable health care can save money and make businesses more competitive.

Drug and insurance companies, unions, and health care reformers paid for that ad.

But the time for making nice may be over. Recently, the CEO of Eli Lilly, John Lechleiter, railed against even the thought of a public health insurance plan to fill in the gaps.

John Lechleiter: I don't think that American patients would or should accommodate themselves to the long waits for care, limited options, and other forms of rationing that inevitably accompany government health care monopolies.

Lechleiter's worried that any move to offer a publicly-run insurance program could push private insurance companies out of business. How a public plan would work is still being fleshed out, but if the plan were open to all:

John Sheils: We would get about 119 million people moving from that coverage to this public plan.

That's John Sheils at the Lewin group. He says a broad government plan could act like Wal-Mart and force doctors and hospitals to lower their prices. That would save billions and undercut private insurers on cost. But is it a bad thing if people choose the government plan?

Sheils: I think physicians and hospitals will think it's a problem.

So will insurance and drug companies, all of whom would lose billions.

Karen Davenport's at the Center for American Progress. She says it's unlikely a public insurance option would completely crush the private insurance market. Just look at Germany, she says, which has a generous public plan and also healthy competition.

Karen Davenport> There is a robust private market in Germany too -- and I think we'll do as well as that or better.

Davenport says private competitors will prevent any public health plan from becoming a bureaucratic nightmare. But having a public option could help cover the uninsured and hold down costs.

In Washington, I'm Steve Henn for Marketplace

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