New Reports Take Drastically Different Views of Public Plan

"In 2008, the total amount of uncompensated care was $11.3 billion, and of that amount, $3.7 billion is related to underfunding of Medicare, and almost $4.1 billion was from Medi-Cal shortfalls," she says.

And if there was another reform program that would pay Medicare rates, "we would stand to lose substantially more. You can not enact a plan that pays those rates."

Commonwealth Fund has different take
But on the other side of the issue is the Commonwealth Fund, which points out that the United States leads all industrialized nations in the amount spent to administer health insurance, and spends 30% more than Germany and three times more than in Japan.

"With the central feature of a national health insurance exchange (largely replacing the present individual and small-group markets)" a public-plan approach "could substantially lower those costs," wrote Karen Davis and colleagues in a Commonwealth Fund Issue Brief.

Looking at three scenarios, estimated administrative costs would fall from 12.7% of claims to an average of 9.4%, the authors wrote. "Savings—as much as $265 billion over 2010 to 2020—would be realized through less marketing and underwriting, reduced costs of claims administration, less time spent negotiating provider payment rates, and fewer or standardized commissions to insurance brokers."

The report added that a national insurance exchange with new insurance regulations and a choice of public or private insurance plans "would increase the transparency of insurance products, (and) streamline insurance plan purchase and enrollment."

"Adding in employer requirements to offer coverage, expanded eligibility for Medicaid, a standard benefit package and premium subsidies, the Lewin Group estimates that more than $200 billion could be realized in administrative cost savings during 2010-2019," according to the report.

The authors believe that a national insurance exchange is one important key to making such a cost-saving strategy work. They added "it presents a singular opportunity to reduce administrative costs substantially over time, provide access to high-quality, efficient care for all Americans, and move the health care system further down the road to high performance."

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