FOR IMMEDIATE RELEASE: June 25, 2009
SCHUMER: ALMOST ONE MILLION NEW YORKERS SPEND MORE THAN A QUARTER OF THEIR INCOME ON HEALTH CARE
Now Is The Time For A Public Plan Option To Reduce Health Insurance Costs To NY'ers And Improve Competition in the Insurance Market
Schumer Has Been Leading The Charge For A Robust Public Plan Option to Make Health Care More Affordable for Middle Class Families
With almost a million New Yorkers spending more than a quarter of their pre-tax income on health care and 2.7 million New Yorkers uninsured, U.S. Senator Charles E. Schumer today detailed his plan for a public health insurance option to offer high-quality and lower cost health care that will compete with private insurance plans.
"The bottom line is that we need to rework our health care system to lower out-of-control costs and to insure more Americans. Our current system, dominated by private insurance companies, simply has not done the job. That is why providing a robust public plan option as a choice for health care consumers is an essential part of the solution," said Schumer.
Schumer’s proposal for a public health insurance option establishes a not-for-profit health insurance company, started by the government, which will compete on a level playing field with existing private health insurance plans in the new “Exchanges,” where affordable health insurance will be sold to individuals and small businesses. Because the public health insurance option is not-for-profit (but also does not receive government subsidies once it is up and running) it should provide lower premiums, and exert downward pressure on the premiums of existing insurance plans.
The public health insurance option is pro-consumer because it adds competition to insurance markets, allowing consumers in the reformed health insurance market one more choice of affordable and comprehensive health insurance. Schumer detailed how health care costs affect people across the state, and discussed his goals for health care reform in the United States. Schumer has been leading the charge for a robust public plan in the health reform debate in the United States Senate, and is at the forefront of the battle to provide New Yorkers with affordable health insurance options. Schumer said that his proposed public plan will compete on the same level playing field as private insurers, will expand the choices available to all New Yorkers and Americans and, by increasing competition, lower premiums for those who are already insured.
Schumer outlined the goals and principles of his plan and said that it is possible to establish a public health insurance option that exerts healthy, competitive pressure on private insurers without relying on unfair, built-in advantages.
“For far too long too many families in too many communities across the state have been without health insurance or have had too few choices, leaving premium prices too high,” added Schumer. “The public plan is designed to provide an additional choice for people across the country and in parts of Upstate where competition is not robust, putting downward pressure on health care premiums for middle class families, and opening up affordable health insurance to those who need it.”
New Yorkers face high heath insurance premiums, and as a result, there are many uninsured or under-insured. The average person who receives health insurance through their employer pays $967 in premiums per year for themselves, or $2,657 per year for their family. Premiums for families have increased in New York by 81% percent between 2000 and 2007, according to the group Heath Care For America Now. There are almost 1 million people who spend more than a quarter of their pre-tax income (and an even greater percentage of their after-tax income) on health care related costs, and almost 2.7 million New Yorkers who are uninsured. Nearly eight out of 10 people (77.8 percent) in families that spend more than 25 percent of their pre-tax income on health care are insured.
Here is how the numbers break down across the state:
· In the Capital Region over 98,000 people are uninsured and nearly 52,000 pay over 25% of their pre-tax income in health care related costs.
· In Central New York 111,000 people are uninsured and 52,000 people pay over 25% of their pre-tax income in health care related costs.
· In the Hudson Valley 280,000 people are uninsured and 123,000 pay over 25% of their pre-tax income in health care related costs.
· In the North Country 68,000 people do not have health insurance and approximately 29,000 pay over 25% of their pre-tax income in health care related costs
· In the Rochester-Finger Lakes Region 120,000 people are insured and 60,000 people pay over 25% of their pre-tax income in health care related costs.
· In the Southern Tier 77,000 are uninsured and almost 33,000 pay over 25% of their pre-tax income on health care related costs.
· In Western New York, approximately 162,000 people are uninsured and over 77,000 people pay over 25% of their income in health care costs.
See the attached report for a county by county breakdown of the numbers
Schumer’s proposed solution:
As Congress continues efforts to reform the U.S. health care system, a promising proposal has emerged to increase options for affordable health coverage for Americans who are either uninsured or underinsured. The establishment of a so-called “public plan” option within a “Health Exchange” that would compete with private plans was proposed by President Obama during his campaign, and was included in Chairman of the Senate Finance Committee Max Baucus’ Health Reform White Paper that was issued last November. Schumer is now leading the charge for a robust public health insurance option in the Senate, and proposed a set of principles to guide the debate and development of the new national public health insurance option.
Establishing a public health insurance option in every “Health Exchange,” introduces greater competition to the health insurance market while improving transparency and quality. Critics argue that a public health insurance option would enjoy unfair advantages that would crowd out private competition and pave the way for a single-payer system. This argument ignores the fact that public and private plans already compete successfully within Medicare and other public programs.
Under a reformed health care system, eligible patients—including uninsured Americans, as well as small-business employees—will be able to shop for and purchase health insurance (public or private) in a centralized, regulated marketplace, or “Health Exchange” (or “Connector,” as it is called in Massachusetts). The public health insurance option would be government-backed health insurance coverage that would offered to insurance shoppers alongside private plans in the Exchange. The publich health insurance option would only be available in the Exchange. The Exchange is a virtual marketplace, right now proposed to be state based, and tailored to the needs of residents in each state. Information and sign up of insurance coverage would be available through the internet and would be regulated to ensure that consumers are offered only high quality and comprehensive coverage.
Schumer said that there are four goals of his public health insurance option:
· Increase affordability and exert downward pressure on rising healthcare costs;
· Bring transparency to the health insurance market;
· Serve as an entity that can pioneer innovative practices;
· Provide a stable “always there” option to uninsured and under-insured Americans.
The primary goal of the public option is to increase affordability of health insurance for all Americans, particularly middle class Americans. A key element to increasing affordability is reducing the profit motive in health care. The public insurance option will be non-profit and thus will put patients before profits. Research has shown that in recent years for-profit national insurance companies have reported record earnings. Because it is non-profit, the public health insurance option will likely have relatively lower costs, and therefore be able to offer lower premiums than a private insurance company. The difference will spur private insurance companies to identify operating efficiencies to keep premiums low. And there are efficiencies to be gained. In 2007, the CEOs of the top 10 U.S. insurance companies made a total of $118.6 million. Those same companies made $12,873,000,000 in profit in 2007, up from $2,440,000,000 in 2000. That’s a jump of almost 500%. The public health insurance option will serve as a key player in the insurance market to keep the focus on improving healthcare outcomes.
The second goal of the public option is the bring transparency to the health insurance market. The public health insurance option will serve as a trusted benchmark for consumers to enable them to easily compare plans, and will be developed by a federal agency with no profit motive. It will also will shed light on inefficient insurance company practices; the transparency of the public plan will transform the market. The private insurance market is dominated by a few large commercial plans. As of 2006, in all but three states the top two plans accounted for 50% or more enrollment. These plans’ rates are not public and thus allow insurers to negotiate multiple prices for the same product. New York State’s 2 biggest health care providers control 47 percent of the market. Local markets are even more concentrated; in Rochester, Excellus BlueCross BlueShield and Preferred Care together control 94 percent of the market. In Cheektowaga, Tonawanda and Buffalo, Blue Cross & Blue Shield of Western New York and GHI control a combined 87% of the market. The concentration in insurance markets in metro areas around the state are as follows:
· The combined market share of the top two insurers in the Albany, Schenectady and Troy control 74% of the market.
· The combined market share of the top two insurers in the Binghamton market control 75% of the market
· The combined market share of the top two insurers in the Buffalo, Cheektowaga and Tonawanda market control 87% of the market
· The combined market share of the top two insurers in the Ithaca market control 91% of the market
· The combined market share of the top two insurers in the Poughkeepsie, Newburgh and Middletown controls 69% of the market
· The combined market share of the top two insurers in the Rochester market control 94% of the market
· The combined market share of the top two insurers in the Suffok County and Nassau County market control 55% of the market
· The combined market share of the top two insurers in the Syracuse market controls 82% of the market.
· The combined market share of the top two insurers in the New York, White Plains, Wayne market controls 41% of the market
The lack of competition drives up premiums, and introducing further competition into the market will push those prices down for those who are already insured.
The third goal of the public health insurance option is to act as an innovation leader for the health insurance system. The public plan will use the latest health information technology to reduce redundant tests and medication errors and streamline administrative processes. Unlike Medicare, the public plan option will have the same health information technology similar to the best private insurers. The public plan will also encourage prevention and wellness by paying doctors to spend more time with patients and coordinate care.
The fourth and final goal is to provide a stable, “always there” recourse to uninsured and underinsured Americans, by ensuring that every consumer has access to a quality health plan no matter where they live. Schumer’s public plan would be offered through the state and the country through local, state based or regional offerings.
Importantly, the public plan will be subject to the same regulations and requirements as all other plans offering insurance in the Exchange. It will not have built in advantages over existing private insurance plans, and will be structured to prevent employers from dumping their insurance coverage and forcing employees to use the public plan. It will also be constructed so that employees with adequate health insurance will not leave their private insurance in favor of the public plan. Finally, the public plan must be self-sustaining. Premiums and copayments would cover claims. Aside from covering some initial start-up costs, general revenues or annual appropriations may not support the ongoing operation of the plan.
Schumer said: “In the end, this is about providing consumers with choices, and introducing more competition in the market. The public plan wouldn’t have any government given advantage over private insurers, but would be able to offer lower premiums because it’s an organization that is not focused on turning a profit. With more choices comes more competition, and with more competition comes lower prices. This will provide relief to families across the country – no matter what their insurance - coping with high premiums, small businesses who are struggling to pay for health insurance for their employees, and for the freelance worker that finds insurance too expensive to purchase on his own.”
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