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A Project of The Annenberg Public Policy Center

More Health Care Scare

Could a public insurance plan spell the end of private insurance companies?


A new ad from Conservatives for Patients’ Rights says that a public health insurance plan now being proposed in Congress “could crush all your other choices, driving them out of existence, resulting in 119 million off their current insurance coverage.”

That’s misleading. The 119 million figure comes from an analysis of a plan that would mirror Medicare and be open to every individual and business that wanted it. But that’s not the type of public plan President Obama has proposed. Nor is such a plan gaining acceptance on Capitol Hill.

The author of the study says that while some have backed the Medicare-like proposal, using the 119 million number “overstates the impact of what now is being considered.”

The ad also falsely cites the New York Times as the source of a statement that what’s being proposed would leave no consumer choices and “government in control of your health care.” The Times didn’t say that at all. The newspaper was just quoting claims made by insurance companies and members of Congress.


The group Conservatives for Patients’ Rights is spending money on the airwaves again, this time warning Americans that the ability to buy health coverage through a public plan — an idea being debated on Capitol Hill — would leave them with “no choices in health insurance.” We wrote about one of CPR’s ads in April. The new TV spot is a step up from the last effort, but still misleading.

The ad, which began airing this week on CNN and Fox News, asks viewers to “imagine” that a bulldozer is “the massive, government-run insurance plan some in Congress want.” Citing a study by the Lewin Group, it says: “This government-run plan could crush all your other choices, driving them out of existence, resulting in 119 million off their current insurance coverage.”

CPR Ad: “Bulldozer”

Narrator: There are hundreds of choices in health care plans today. But imagine this is the massive, government-run insurance plan some in Congress want. This government-run plan could crush all your other choices, driving them out of existence, resulting in 119 million off their current insurance coverage, leaving no choices in health insurance and government in control of your health care.

CPR Chairman Rick Scott: It’s not too late. Protect your health care choice. Tell Congress to say no to a government-run plan.

The study does include the 119 million number, but “this government-run plan” that the ad refers to is one of six possibilities the Lewin Group analyzed, and the most extreme version of a public plan at that. The type of public plan necessary to cause 119 million people to move from private insurance to a considerably cheaper public option doesn’t appear to be gaining traction in Congress. And it isn’t what President Obama has proposed. It’s certainly true, as the ad says, that “some” legislators have backed a Medicare-like public plan that could undercut private insurers, but casual viewers could easily miss that qualification. As John Sheils, senior vice president of the Lewin Group, says of using the 119 million figure, “In a sense it overstates the impact of what now is being considered on the Hill. But at the same time, it would be really disingenuous for people to say, well, we never meant to do that.”

The Lewin Group is part of a subsidiary of UnitedHealth Group, which owns the insurer United Healthcare. It says it operates with “editorial independence,” and we’ve often referred to its studies. This report, published April 6, looked at several options for a public plan, including one that would pay health care providers at Medicare-level rates (i.e., a plan that would pay doctors and hospitals less and have much cheaper premiums than private insurance) and be open to all individuals and all businesses. The Lewin Group said such a plan “would enroll about 131.2 million people (includes some uninsured who become covered). The number of people with private health insurance would decline by about 119.1 million people.” Attracted to a less costly insurance plan – premiums would be about 30 percent less than those offered by private insurers – businesses, and individuals, would make the switch first, then some private insurers could go out of business, not the other way around, as the ad says. But the study looked at several variations in how a public plan could be structured – at the low end, one type of plan would cause only 10.4 million to move off their current coverage.

The report prominently notes that the type of public plan President Obama proposed on the campaign trail would be available only to individuals, the self-employed and small employers – not to everyone – and therefore, wouldn’t pull anywhere near as many people off private insurance. The Lewin Group estimated that if payment rates were like Medicare, a detail Obama didn’t specify in his campaign proposal, 42.9 million would enroll in Obama’s type of public plan and 32 million would move off of private coverage. The numbers are lower for plans using different payment rates to medical providers.

The study finds that the more like Medicare a public plan is, the cheaper it would be and the more people and businesses it would attract. Medicare reimbursement rates are significantly lower than what private insurers pay health care providers. Conversely, a public plan that was modeled on private insurance – an idea being pushed by Sen. Charles E. Schumer of New York – wouldn’t be that enticing and wouldn’t cause much of a shift in the way workers are covered. “That’s an area you might get 10 to 12 million,” moving off private insurance, Sheils says.

Sen. Ted Kennedy, meanwhile, has drafted a health care proposal with a public plan that would pay providers at Medicare rates plus 10 percent. The Lewin Group study didn’t specifically look at that option, but it did analyze the effects of a plan paying rates midway between Medicare and private coverage. That would be close to Kennedy’s idea. (The Lewin Group study notes that Medicare payments to hospitals are 30 percent less than what private insurers pay and payments to doctors are 20 percent less.) Under the midpoint scenario, the number with private insurance would drop by between 21.5 million and 67.5 million, depending on who would be allowed to buy into the public plan.

Conservatives for Patients’ Right’s ad doesn’t make clear that the government would have to institute the most generous public plan in order to have the estimated 119 million move off of their current plans, according to the study.

One final point on the Lewin study: The ad may well give some the impression that the 119 million people that are “off their current insurance coverage” are simply losing their insurance plans altogether. That’s not the case, as all would still have coverage through their employer, who decided to switch to the cheaper, public alternative.

It’s also worth noting that this number comes from one analysis, and some researchers haven’t predicted such a damaging effect on the private insurance market from the introduction of a public plan. A 2008 report by the Urban Institute said in general terms: “We think that a public plan would not drive out private competitors. … Private plans that offer better services and greater access to providers, even at a somewhat higher cost than the public plans, would survive the competition in this environment. It is also conceivable that private plans offering a lower cost option—for example, lower premiums than the public plan, say by exploiting care management innovations, and network and payment rate limitations—could stake out a separate competitive niche in some markets.” The authors said there were constraints on the ability of the government to set very low payment rates.

New York Times Didn’t Actually Say That

The ad goes on to say the public plan would “leav[e] no choices in health insurance and government in control of your healthcare,” while citing the May 5 New York Times. But that’s not the Times‘ analysis of what a public plan would do.

We’ve seen this type of newspaper endorsement technique before in political ads, where the credibility of a publication is used to bolster the claims. In this case, the Times didn’t say that a public plan would leave “government in control of your healthcare.” Rather, a May 5 article by reporter Robert Pear said that this was the view held by Republicans and insurance companies.

New York Times, May 5: But insurance companies and Republican lawmakers say a government-run plan could drive private insurers out of business and eventually lead to a single-payer system run by the government.

The article also mentioned a quote from Democratic Rep. Jan Schakowsky of Illinois, who said that a public plan could “put the private insurance industry out of business” because of the public plan’s “superiority.”

Interestingly, the May 5 article is about Schumer’s proposal to make a public plan closely resemble private ones. As Sheils told us, if that type of public plan is established, it would mean 10 million to 12 million wouldn’t keep their current insurance, according to Sheils’ analysis – not the 119 million figure the ad touts.

– by Lori Robertson


Sheils, John and Randy Haught. “The Cost and Coverage Impacts of a Public Plan: Alternative Design Options.” Lewin Group, 6 April 2009.

Pear, Robert. “Schumer Points to a Middle Ground on Government-Run Health Insurance.” New York Times, 5 May 2009.

Sheils, John. Interview with FactCheck.org, 11 June 2009.

Holahan, John and Linda Blumberg. “Can a Public Insurance Plan Increase Competition and Lower the Costs of Health Reform?” Urban Institute, 2008.