Monday, November 16, 2009

Experts Split Over How Public Health Insurance Would Affect California

health insurance

Although supporters of a government-run public health insurance option say the proposal could improve health care quality in California, others say the plan likely would have higher premium costs, the San Jose Mercury News reports.


Supporters say California's relatively limited health insurance marketplace could benefit from greater competition. Although the state currently has five major insurers, Anthem Blue Cross and Kaiser Permanente control about three-fifths of the state's health insurance market, according to the American Medical Association.

Newly elected Rep. John Garamendi (D-Calif.), former California insurance commissioner, said a more competitive health insurance marketplace could motivate insurers to improve their business practices so they do not lose members to the public plan.

Lucien Wulsin -- a health care attorney and director of the Santa Monica-based Insure the Uninsured Project -- said a government-run plan also could experiment with different incentive models and spur innovation in the health care system.

Other experts note that California has a large pool of residents who might seek coverage under the public plan. The state currently has 6.8 million uninsured residents and 2.7 million residents who purchase coverage on the individual insurance market.


Other analysts say relatively few Californians would seek coverage under a government-run plan because it might have higher premiums than private health plans.

The Congressional Budget Office predicts that fewer than one million Californians would join the public plan. The office said the option is likely to attract less healthy residents, who could drive up overall premium costs.

A government-run plan also might have difficulty securing lower premiums because the House bill (HR 3962) would require the plan to negotiate payments with hospitals and physicians, instead of tying payments to Medicare rates. Experts say some health care providers might choose not to participate in the public plan if they are dissatisfied with the proposed payment rates.

Patrick Johnston, president and CEO of the California Association of Health Plans, said the House's public insurance option likely would have only a modest impact on California.

Other observers note that it remains unclear whether final health care reform legislation will include a public health insurance option (Zapler, San Jose Mercury News, 11/15).