The Case For A Medicare-Like Backup Is Even Stronger Now

As the economy flounders, more people will be left with no health insurance or health insurance that still leaves them with unaffordable health care costs. Making a public health insurance plan like Medicare available as a back-up would help ensure the health and financial security of all Americans.

According to the Kaiser Family Foundation [1], a one percent rise in the nation's unemployment rate is projected to lead to 1.1 million more people without health insurance.

And unemployment is certainly rising. Bloomberg News warns [2] that:

"Reports issued two days before the release of U.S. jobless data showed private employers cut payrolls at a faster pace in December, threatening to send the unemployment rate to levels unseen in a quarter century.

"The level of unemployment is going to be higher" and may exceed 10 percent, Martin Feldstein, the former National Bureau of Economic Research president and Harvard University professor said in a Bloomberg Television interview. "It's really bad and it needs a fix," he said before a hearing on the fiscal-stimulus plan with House lawmakers in Washington.

"Companies cut an estimated 693,000 jobs in December, the most since ADP Employer Services began its gauge based on payroll data in 2001. Chicago-based Challenger, Gray & Christmas Inc. said firings announced by U.S. employers rose 275 percent last month from December 2007, to 166,348."

But health security is not very strong for those keeping their jobs either. The Atlanta Journal Constitution reports [3] that Atlanta employers tamed their health benefits costs in 2008 better than their counterparts nationally. How did they do it? "Their cost-controlling tactics included raising deductibles, co-pays and out-of-pocket spending limits." In other words, making their employees pay more for their health care.

The Dayton Business Journal reports [4] that employers in that city will also be shifting the cost of health care benefits to employees to save on costs in 2009:

"Nearly 11 percent of Dayton employers responding to a survey said they would shift health benefit costs to employees next year by raising deductibles, co-pays, co-insurance or out-of-pocket maximums. In addition, 42 percent of respondents will increase employees' share of the premium contribution, and 5 percent will increase cost-sharing in some other way."

Atlanta and Dayton are not alone, however. This is a national trend. A country-wide survey of employer fringe benefits [5] found that the median deductible for individuals in PPO plans (Preferred Provider Organizations) jumped to $1,000 this year, up from $500 last year, as a way for companies to shift more of their health care costs to employees. For family coverage, the median deductible rose to $1,850, from $1,500.

The U.S. government should guarantee everyone has access to quality, affordable health care. Particularly as more people's health and financial security is taken away. And Americans agree. AARP recently released a survey that examined the effect of the current economic recession on the health care decisions of U.S. adults. The Kaiser Network reports [6] that, according to the survey, more than 80% of adults said that they strongly or somewhat agree that the federal government should provide financial assistance to residents who lose their jobs to allow them to maintain their health insurance or purchase affordable coverage during the recession.

Providing a public, government-run health insurance plan choice is the best, most cost-effective way to make such a guarantee a reality.

“The Case for Public Plan Choice in National Health Reform: Key to Cost Control and Quality Coverage," a report [7] released by the Institute for America's Future and the UC Berkeley School of Law's Center on Health, Economic & Family Security, says a public health insurance plan like Medicare offered together with private health plans could result in $1 trillion in national savings over ten years by driving down costs, improving efficiencies and fostering innovation.

Among the report's key findings [8]:

"A health care system that contains costs and drives value must include a good public plan if the broad goals of reform--universal insurance and improved value--are to be achieved... Public insurance has a better track record at reining in costs, while preserving access; it has pioneered key quality and payment innovations that have often set the standard for private plans; it is essential to set a standard against which private plans must compete to drive value and can be a source of stability for people." [Emphasis added]

But given the immediacy of the economic crisis, we should not have to wait for health care reform to have this choice.

Senator Max Baucus has proposed [9] making health care coverage immediately available to Americans aged 55 to 64 through a Medicare buy-in. That Medicare expansion should become law and the opportunity extended to people who lose their employer-sponsored coverage.

Medicare has a track record that proves it is better than private insurance when it comes to reining in costs while preserving access. Professor Jacob Hacker, the author of the "The Case for Public Plan Choice in National Health Reform" report [7], provides a lot of evidence of this, including the fact that "between 1997 and 2006, health spending per enrollee (for comparable benefits) grew at 4.6 percent a year under Medicare, compared with 7.3 percent a year under private health insurance. At the same time, Medicare has maintained high levels of provider participation and patient access to care."

Why shouldn't everyone be allowed access to the efficiency and stability of Medicare?