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New Lewin Group Report Examines Potential Impacts And Alternative Design Options For A Public Health Plan

April 06, 2009

FALLS CHURCH, VA – April 6, 2009 - The Lewin Group released a report today titled “The Cost and Coverage Impacts of a Public Plan: Alternative Design Options.” This report examines potential impacts that a “public health plan” might have in competing for enrollment with the private insurance industry. A public plan is currently being considered in a number of health reform proposals being considered by President Obama and the U.S. Congress. This analysis enhances prior work done by The Lewin Group of the major party presidential candidate health reform proposals during the 2008 campaign, as well as more recent analyses of Congressional plans being considered. The report estimates the impact on cost and coverage based on different levels of eligibility and reimbursement rates.

Key study findings include:
  • If Medicare payment levels are used in the public plan, premiums would be up to 30 percent less than premiums for comparable private coverage. On average, the monthly premium in the public plan for a typical benefits package would be $761 per family compared with an average of $970 per family in the private market for the same coverage.
  • If as the President proposed, eligibility is limited to only small employers, individuals and the self-employed, public plan enrollment would reach 42.9 million people. The number of people with private coverage would fall by 32.0 million people. If private payer reimbursement levels are used by the public plan, enrollment would be lower, with only 10.4 million people switching to the public plan from private insurance.
  • If the public plan is opened to all employers as proposed by former Senators Clinton and Edwards, at Medicare payment levels we estimate that about 131.2 million people would enroll in the public plan. The number of people with private health insurance would decline by 119.1 million people. This would be a two-thirds reduction in the number of people with private coverage (currently 170 million people). Here again, if the higher private payer levels are used, enrollment in private insurance would decline by only 12.5 million people.
  • Assuming Medicare reimbursement rates and eligibility for all individuals and employers, provider net income would decline under this public plan proposal, even after accounting for reduced uncompensated care and increased utilization for the newly insured. Net hospital revenues would fall by $36 billion (4.6 percent), and physician net income would fall by $33 billion (6.8 percent). If eligibility is restricted to individuals and small firms, net hospital revenues would actually increase by $11.3 billion due to the increase in newly insured individuals. But net physician incomes would decline by $3.0 billion.
John Sheils, the study’s principal author and senior vice president at The Lewin Group, is available to discuss this analysis. He used The Lewin Group’s Health Benefits Simulation Model (HBSM) to estimate the impact of the two health reform proposals on coverage and expenditures for employers, governments and households. The report and a detailed description of the HBSM is available on the Lewin Web site at www.lewin.com.

Click here to download the full report.

About The Lewin Group
The Lewin Group is a premier national health care and human services consulting firm with nearly 40 years’ experience finding answers and solving problems for leading organizations in the public, nonprofit, and private sectors. With its industry experience and knowledge, The Lewin Group provides its clients with high-quality products and insightful support to help them maximize the delivery of programs and services that make a difference in the lives of their constituents. For more information on The Lewin Group, visit www.lewin.com.

The Lewin Group is an OptumInsight company. OptumInsight, a wholly-owned subsidiary of UnitedHealth Group, was founded in 1996 to develop, acquire and integrate the world's best-in-class health care information technology capabilities. For more information, visit www.optuminsight.com. The Lewin Group operates with editorial independence and provides its clients with the very best expert and impartial health care and human services policy research and consulting services.

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