The so called “fiscal conservatives” in the Senate have insisted that we use only extremely wasteful private insurance companies to expand coverage to roughly 15 million Americans. Private health insurance companies have a terrible track record compared to public health insurance programs. Public programs, like Medicare, are able to provide high-quality care much more cost effectively. Because of the demands of “centrist fiscal conservatives,” as a nation we will waste roughly $200-$350 billion to help sustain the broken private insurance system.
The CMS estimates the stronger public option considered in the House (Medicare rates plus 5% with provider opt-out) would cost 18% less than private insurance. If you remove the provider opt-out, got rid of the 5% extra payment, and added an auto-enrollment to reduce administrative cost, the price of insuring people with Medicare or a Medicare-like public program would probably be between 25%-30% less than private insurance. Even the insurance industry-owned Lewin Group determined that a robust public option, which would, in effect, be Medicare buy-in, would cost roughly 30% less than covering someone with private insurance.
The Senate bill will spend $447 billion and the House bill will spend $602 billion on affordability tax credits for the new exchange. Since the tax credits are structured to cover all the costs over a set percentage of people’s income, a small reduction in total premiums would translate to a large reduction in government spending. For example, by reducing premiums 30%, people making between 350-400% of FPL will probably no longer need any affordability tax credits.
Simply creating a public health insurance program based on Medicare for people to buy into, instead of the new exchange, would cost roughly between $200-$350 billion less. For a faction of the cost to the government, we could provide the same number of people with the small quality of health insurance. Despite the best efforts of progressives to defend the American taxpayer from wasteful spending, so called “fiscal consevratives” have insisted on wasting hundreds of billions by only using extremely expensive private insurance companies. There is nothing “centrist” about demanding the government funnel hundreds of billions to–and force millions of Americans to buy a product from–the extremely broken but politically well-connected health insurance industry.