Study Says Public Plan Could Cut Uninsured, Hurt Health Insurers

A public insurance option for middle-income families would help decrease the number of uninsured U.S. residents, but it also could put private insurance plans out of business, according to a Lewin Group study released Monday, the AP/Seattle Post-Intelligencer reports.

The study found that if a public plan -- open to all workers and people seeking coverage on the individual market -- was to pay health care providers at the same rates as Medicare, it would soon have about 131 million beneficiaries, while enrollment in private plans would drop.

Lewin Vice President John Sheils said that under that scenario, "The private industry might just fizzle out altogether."

A public plan paying Medicare rates would charge monthly premiums for family coverage of about $761, compared with an average of $970 in private plans, according to the study.

Lewin also looked at a hypothetical public plan, also paying Medicare rates, that would be limited to workers at small businesses, people seeking coverage on the individual market and the self-employed.

Under these conditions, about 43 million people would enroll in the public option, according to Lewin.

However, if this plan were to pay providers rates similar to those paid by private insurers, it would enroll 17 million people, the study found. Depending on how the plan was configured, public coverage would reduce the number of uninsured by 24 million to 28 million U.S. residents.

Although the study results are dependent on details to be decided by lawmakers, the report "could provide ammunition for critics who say a public plan would move in the direction of government-run medicine," the AP/Post-Intelligencer reports.

Sheils said, "Our paper is more or less written as a 'how to' manual."