Howard Dean: Public Option Not a Threat to Private Health Insurers
By CYRIL TUOHY, managing editor of Risk & Insurance®
The "public option" proposed by President Barack Obama in his efforts to reform the nation's healthcare system will not put private health insurers out of business, said former National Democratic Committee Chairman Howard Dean.
"It will not wipe out private insurance companies," said Dean, the keynote speaker at the 24th Annual Conference of the Vermont Captive Insurance Association, which kicked off its first full day of meetings and presentations on Wednesday. "Insurance companies will have to compete. They know how to make money and they will."
A public option would give today's 44 million uninsured Americans coverage under a government-backed program, similar to the government's Medicare program offered to Americans older than 65.
Health insurance companies have criticized the public option as expensive and unfair, as it would give taxpayer-subsidized coverage an advantage. Congress will debate health reform bills when lawmakers reconvene in the fall.
Dean, a physician by training and the former governor of Vermont, also said that recent efforts at keeping costs down through health savings accounts (HSA) would "save a few bucks," but fail to address the big issues.
Grappling with the big, complex and expensive procedures, which under the current healthcare systems are paid for by insurance companies, is the real issue.
"People come in and don't ask about price because someone else pays for it," Dean said.
The healthcare business model is broken compared with nearly every other industry, where people can shop around for the cheapest product or service, as consumers can't send the bill to a third party.
The "perverse incentives" of the fee-for-service system simply encourages doctors to perform more tests and then bill the insurance carrier, Dean said, which is partly why the United States spends 17 percent of its gross national product on healthcare, with uneven results.
By contrast, Canada spends only 10 percent of GNP on healthcare, and often has better results to show for it, said Dean.
Statewide experiments to offer universal healthcare have shown some promise, but have still fallen short. Massachusetts, for example, has reached the goal of covering more than 97 percent of its uninsured, but it has only done so at an astronomical cost.
Giving Americans another choice outside the employer-based system will help rebalance the nation's broken healthcare system, said Dean. Taxes on the richest Americans would help pay for the public option.
Medicare, instituted in the 1960s for Americans 65 or older, may not always provide the best medical care available, but it is always there for people who want it or need it, Dean said.
Most employees are generally content with their employer-sponsored benefits, and that's why any attempt at healthcare reform will retain what is already in place, said Dean. "You don't want to force people out of the employer-based system until they are ready," he said.
Dean also said that if he were in charge of healthcare reform, every American under age 30 would have access to free healthcare, paid for by the government. That group typically makes up the healthiest portion of the population, and is more likely to have transient or part-time jobs ? where private sector insurance is often not available to begin with.
Asked why tort reform isn't included in the healthcare reform bill, Dean said the Obama Administration shrewdly figured that fighting the insurance industry and the nation's powerful trial lawyers would heave meant certain defeat.
"Tort is a big deal but not that big a deal," he said. In addition, he said, many tort claims are decided by judges in state and not federal courts.
August 13, 2009
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