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AHIP Statement on Government-Run Plan
Date:10/26/2009

WASHINGTON, Oct. 26 /PRNewswire-USNewswire/ -- America's Health Insurance Plans (AHIP) released the following statement today from Karen Ignagni, President and CEO:

"A new government-run plan would underpay doctors and hospitals rather than driving real reforms that bring down costs and improve quality. The American people want health care reform that will reduce costs and this plan doesn't do that.

"The divisive debate about a government-run plan is a roadblock to reform. It's time we focus instead on broad-based reforms that will ensure the affordability and sustainability of our health care system."

America's Health Insurance Plans - Providing Health Benefits to More Than 200 Million Americans

FACT CHECK: Government-run Plan - Does Not Control Costs and Disrupts People's Coverage

  • What the True Drivers of Health Care Costs Are:

Health care costs are rising at an unsustainable rate and adding a significant burden on families and employers across the country. Click here to find out important facts about rising health care costs.

  • Impact a Government-run Plan Would Have on Hospitals:

AHIP's study "An Illustration of the Impact on Hospitals in California of a Government-Run Health Plan that Pays Medicare Fee-for-Service Rates," examines the financial impact on hospitals if there were a large scale shift of individuals with private coverage to a government-run plan that reimburses providers at Medicare rates or Medicare rates plus 10 percent.

  • Medicare's True Administrative Costs:

Check out this report comparing administrative costs between Medicare and private health plans.

  • Milliman Study on the Impact of Cost-shifting:

Low Medicare and Medicaid reimbursements to hospitals and physicians lead to significantly higher health insurance costs for consumers and employers, according to a study released by Milliman Inc. Click here for the full report.

  • Robert Samuelson - The Washington Post - Public Plan Mirage
    • No Advantage on Administrative Costs: "As for administrative expenses, any advantage for the public plan is exaggerated, say critics. Part of the gap between private insurers and Medicare is statistical illusion: Because Medicare recipients have higher average health expenses ($10,003 in 2007) than the under-65 population ($3,946), its administrative costs are a smaller share of total spending. The public plan, with younger members, wouldn't enjoy this advantage."
    • No Cost Control: "The public plan's low costs would be artificial. Its main advantage would be the congressionally mandated requirement that hospitals and doctors be reimbursed at rates at or near Medicare's. These are as much as 30 percent lower than rates paid by private insurers, says the health-care consulting firm Lewin Group. With such savings, the public plan could charge much lower premiums and attract lots of customers. But health costs wouldn't subside; hospitals and doctors would offset the public plan's artificially low reimbursements by raising fees to private insurers, as already occurs with Medicare. Premiums would increase because private insurers must cover costs to survive."
  • Fred Hiatt - The Washington Post - Shirking Cost Control
    • Disrupting People's Current Coverage: "And if, as seems likeliest -- and as House legislation mandates -- the plan uses government power to demand lower prices from hospitals and drug companies, those providers may lower quality or seek to make up the difference from private payers. Private companies would have to raise their rates, so more people would choose the public plan, so private rates would rise further -- and we could end up with only the public option and no competition at all."

SOURCE America's Health Insurance Plans


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SOURCE America's Health Insurance Plans
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