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Life Health > Health Insurance > Health Insurance

Health Czar Speaks

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Private insurers could end up running a new public health insurance program for working-age Americans.

Nancy-Ann DeParle, director of the White House Office of Health Reform, discussed the administration’s views on public health insurance program proposals and other health finance reform efforts here today at a meeting sponsored by the Henry J. Kaiser Family Foundation, Menlo Park, Calif.

The Obama administration says health reform should include a public health insurance option.

But the administration is prepared to compromise by considering proposals that would permit private insurers to run such a program, and it might consider a bill that did not include a public health insurance option, DeParle said.

President Obama wants to enact a health care reform bill this year, and he wants to find ways to bridge gaps between the Democrats and the Republicans, DeParle said.

DeParle acknowledged that the health care industry is concerned about a study conducted recently by John Sheils, an actuary at the Lewin Group, Falls Church, Va., a unit of UnitedHealth Group Inc., Minnetonka, Minn.

Sheils estimated premiums for the public health insurance program could be 30% lower than premiums for comparable private coverage, due to lower provider payment levels and lower administrative costs.

In theory, under one scenario, 119 million of the 170 million U.S. residents who now have private health coverage could end up with public coverage, Sheils estimated.

DeParle discounted the Sheils study, saying industry concerns are overblown.

Asked about her definition of a “public plan,” DeParle said it would be a plan sponsored by the government with very low administration costs, paying no commissions to brokers and creating no profits for insurers.

“That is where we are, and that is what we are working with Congress on,” she said “If there are other ways of doing that, [Obama] is open to talking about them…. There are ways to get around policy concerns. That is why we think we can reach agreement.”

The public plan could be a public plan administered by private insurers, along the lines of the publicly managed government health plans that exist in more than 30 states, DeParle said.

“It depends on how you price the public plan,” she said. “You don’t have to use Medicare rates.”

DeParle also said the administration has no desire to reopen the debate about whether the government should provide an alternative Medicare Part D prescription drug program.

And, she said, the administration will continue to seek cuts in the current cost of the Medicare Advantage program, to bring program costs in line with the cost of the regular Medicare fee-for-service option.

Medicare Advantage plans now cost between 12% and 14% more than fee-for service under Medicare, and the Obama administration wants to help pay for universal health care by cutting $177 billion in Medicare Advantage costs over 10 years.

The administration believes it can cut the Medicare Advantage costs by “moving to a more competitive system” that creates benchmarks against which the private plans will bid “based on their projections as to what it will cost to treat patients,” DeParle said.

Another way to ensure a lower-cost, more competitive Medicare Advantage system is to provide “more incentives for hospitals to prevent readmissions,” DeParle said.

The administration wants to do this by designating a health care professional to coordinate the outpatient care of a fee-for-service patient once the patient leaves the hospital, she said.


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