Prepared by Leonard Rodberg, PhD, Professor of Urban Studies at Queens College/CUNY and Research Director of the NY Metro Chapter of Physicians for a National Health Program
Summary
There is little reform, and no serious cost control, in the health care reform plans that President Obama and the Congress are proposing:
Most people will continue to get their coverage through private insurance companies and will be forced to buy insurance of questionable value.
Employer-based insurance will continue unchanged, with employers free to change coverage at any time, insurers free to change their physician and hospital networks, and employees still locked into their jobs if they want to keep their coverage.
While the uninsured will be mandated by law to purchase health insurance, the Congressional bills place no limit on what the private insurance companies can charge for premiums or how great their deductibles and co-pays can be.
The structure of health care finance is in no way changed, and no serious cost control measures are built into these plans.
The “health insurance exchange” and its “public option,” the only new structural features of these plans, will affect little more than 10% of the population and will have no significant impact on the overall health care system. Those who receive insurance through their employer are not permitted to access the exchange or the public option.
The “public option” must be self-sustaining and follow the same rules as private insurers. Once set up, it will receive no government funds.
The subsidies for low- and moderate-income individuals and families are completely inadequate. Many will find insurance unaffordable, and underinsurance will continue.
Tens of millions of people will continue to be uninsured.
These plans are not reform; they are little more than a placebo, a detour from the path to true reform of our health care system.
President Obama has enunciated a set of goals for health care reform. These include (from his budget statement in February):
Aim for universality… put the United States on a clear path to cover all Americans.
Make health coverage affordable… reduce growing premiums and administrative costs.
Guarantee choice… provide a choice of physicians… keep your doctor.
Provide portability of coverage… workers not locked into their job just to secure health coverage.
We share the President’s goals. And yet the proposals coming out of Congress will not achieve them.
Unique among the nations of the world, the United States relies on private, for-private insurance companies to provide health insurance for the majority of its citizens. The plans that Congress is developing do not change this. In fact, they reinforce the very system that, in our view, is responsible for the problems we face. They simply delay movement toward the kind of system that can truly address them effectively. They are a detour on the path to true reform of our health care system.
In fact, employer-provided health insurance, on which 60% of us depend, will be little changed, even if Congress creates a “public option” or a new “health insurance exchange.” Actually, employer-based insurance will become even more prominent, as employers are required either to provide insurance to their employees or pay a fee to government that will fund subsidies that will enable them to purchase insurance through the “exchange.” (One change is proposed for employer-provided insurance: it could not include any annual or lifetime limits on coverage. While this is clearly desirable, by thus incorporating catastrophic insurance into basic plans, this will undoubtedly raise their cost).
Employer-based insurance will continue unchanged: Private health insurance companies will continue to operate exactly as they do now. Employers will be free to change coverage at any time; insurers will be free to change their physician and hospital networks; and employees will still be locked into their jobs, if they want to keep the same doctor, hospital or insurance coverage they now have.
President Obama’s mantra “if you like what you have, you can keep it” has been converted into “if you already have insurance, you have to keep it.” Everyone is required to have insurance, and employees offered insurance by their employers are required (if the price is not too high) to take it. The House and Senate bills only allow access to the “exchange” to people who don’t have insurance through their employer, and employees have to accept whatever plans their employer offers. They cannot choose the public option.
Obama has said his goal is health reform that will “ensure that you won’t lose your coverage even if you lose your job, or if you change your job,” but nothing in these bills provides this assurance. Again, employer-provided insurance is not touched by these plans.

Everyone will be required (or “mandated”) to have health insurance, either from their employer or purchased on their own. If their incomes are below 133% of the Federal poverty level, they will be eligible for Medicaid. The rest will have to purchase insurance through the new health insurance “exchange” and will there have access to the new “public option.”
Congress is specifying that only those who are uninsured or who do not receive insurance from their employers will have access to the “exchange” and the subsidies available through it. The Congressional Budget Office (CBO) estimates that between 30 and 40 million people might obtain coverage through the exchange. These Congressional plans, which are supposed design to “overhaul a broken system,” actually will affect barely 10% of the American people.
Clearly, a health insurance exchange that affects only 10% of the population cannot have a great much impact on the rising cost of health care. In particular, a “public option” that is accessible only through the exchange will have such a small member base that it could have only a marginal impact on the overall health care system. Perhaps they understand that, if a public plan, that was less expensive than private insurance and better “behaved” in reimbursing for claims, were to be opened to everyone, that could well be the end of private insurance as we know it.
The subsidies to help the uninsured purchase private health insurance are likely to be totally inadequate. A family of four earning $88,000 per year will receive no subsidy. Since the average family policy today costs more than $12,500, a family without subsidy will have to spend 14% of their income on just the premium alone. Add in the co-pays and deductibles not covered by insurance, and health care will be completely unaffordable for this family. While the uninsured will be mandated by law to purchase health insurance, the Congressional bills place no limit on what the private insurance companies can charge for premiums, or how great their deductibles and co-pays can be. And no limits are placed on drug prices, nor is there any plan to have the government negotiate drug prices with the pharmaceutical companies, as many advocates have urged for the Medicare program.
If we look at what has happened in Massachusetts, whose “universal health care” plan is the model for the Congress, we can see how inadequate will be the insurance that the uninsured will be required to buy. Individuals in Massachusetts face deductibles of at least $2,000 per year, and families’ deductibles are $4,000 per year. Even after spending thousands of dollars on private health insurance premiums, they must spend thousands of dollars more before the insurance actually provides them with any coverage at all.
Would the existence of a “public option” change this? The public plan that the Congress has designed is required to be financially self-sustaining, just like the private insurance with which it competes. Why would such a plan be attractive to consumers, other than perhaps its “public” label and its likely lower cost, estimated by the CBO to be about 10% below the cost of comparable private plans? The proposed public option will provide three kinds of plans — “basic, enhanced, and premium plans” just like private insurance. Since the public option has to operate under the same financial rules as private insurance, it is, in fact, just private insurance masquerading as a public entity.
Finally, central to Obama’s goals is holding down health care costs. However, the structure of health care finance is in no way changed by these Congressional bills, and no serious cost control measures are built into them. Administrative costs will not be reduced. In fact, the director of the CBO has said, “We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.”
Most people will continue to get their insurance coverage through multiple employer-provided private insurance companies, while those who are currently uninsured will be forced to buy insurance of questionable value. The “health insurance exchange,” the only new structural feature of these plans, will affect such a small portion of the population that it could have no significant impact on the overall cost of the health care system.
The CBO also finds that, even after spending more than $1 trillion in the next ten years, nearly twenty million people will remain uninsured. We estimate that, to cover everyone and remove all financial barriers to care would require that we spend between $200 and $300 billion more each year on health care. Where would we get that amount of money? The only answer, but one which the leading committees of the Congress have steadfastly ignored, is through adoption of a single payer system, that is, an improved and expanded Medicare-for-All. This would achieve, by our best estimates, as much as $400 billion savings each year by eliminating the excessive overhead and administrative costs of the private insurance industry, along with the administrative and billing costs which that industry imposes on physicians, hospitals, and every other health care provider.
A great deal of effort has gone into developing a plan that will manifestly fail. Had Congress focused instead on developing a single payer, Medicare for All program, which address both the need for broad access to care and the need to contain costs, they would have made much more progress toward the health care system that would really serve the American people. The struggle for real health care reform will go on.
