A Project of The Annenberg Public Policy Center

Pushing for a Public Plan

Two liberal groups ramp up their efforts in support of a major health care overhaul.


Summary

Liberal groups have hit TV and radio with ads praising the idea of a public health insurance plan, an option that President Obama and other Democrats support as part of changes to the health care system. But the ads lack context and could well mislead the public:

  • A TV ad by Health Care for America Now asks, “What if we stripped away the 13 billion dollar insurance company profits?” Our answer: It wouldn’t make much of a difference. The ad fails to mention that the figure represents six-tenths of 1 percent of all health care spending. And profits wouldn’t necessarily be eliminated or reduced by the creation of a public insurance option.
  • The HCAN ad features a graphic that shows a monthly premium bill rising to more than $600. But that’s double the average monthly bill for a family with employer-sponsored coverage.
  • The TV spot also claims that health insurance company CEOs received $119 million in “bonuses,” which is false. That figure represents total compensation, including salary.

Separately, a radio ad from MoveOn.org Political Action attacks Democratic Sen. Landrieu for opposing a public plan. The radio ad implies that Landrieu is influenced by “$1.6 million in campaign contributions from the health care industry.” But that figure is both inflated and misleading. It includes donations from insurance companies that have nothing to do with health care. And it lumps together donations from health care groups and professionals on both sides of the issue.

Analysis

Health Care for America Now, a coalition that includes liberal and union groups, is on the airwaves with an ad that offers an idyllic look at what a public health insurance plan might mean. HCAN’s ad started airing on June 19 and will run for 10 days in 10 states: Arkansas, Delaware, Florida, Iowa, Louisiana, Maine, New Mexico, North Carolina, Oregon and Washington.

President Obama and Democrats in Congress have backed the idea of offering a public plan as a choice for some or all Americans. But HCAN’s rosy picture lacks some important context, and in a few instances is misleading.

The ad starts off by highlighting the large profits and paychecks for health insurance companies and their CEOs. “What if we stripped away the 13 billion dollar insurance company profits? The 119 million dollar CEO bonuses?” an announcer asks.

Health Care for America Now Ad: “What If?”

[TET ]

Announcer: What if we stripped away the 13 billion dollar insurance company profits? The 119 million dollar CEO bonuses? The endless denials. The soaring co-pays and premiums?

You’d have health care between you and your doctor – that’s the President’s plan. Keep the coverage you have now. Or choose from a range of plans including a public health insurance option to lower costs and keep insurance companies honest. Tell your Senators – It’s your health. It should be your choice. [/TET]

Those figures are for 10 of the largest publicly traded companies in 2007. HCAN lists the profit and pay numbers in a report, and we verified that the figures were correct by checking the companies’ filings with the Securities and Exchange Commission. But while the ad claims the “CEO bonuses” totaled $119 million, HCAN’s own report says that amount was for “total compensation,” not just bonuses (see page 8). Also, it’s worth noting that while these figures sound like a lot of money — and few would dispute the fact that health insurance company CEOs make healthy salaries — these numbers represent a very small fraction of total health care spending in the U.S. In 2007, national health care expenditures totaled $2.2 trillion. Health insurance profits of nearly $13 billion make up 0.6 percent of that. CEO compensation is a mere 0.005 percent of total spending.

What if that was stripped away? Well, it wouldn’t amount to a whole lot of savings for the health care system.

We asked the group how such profits could be taken away, and a spokeswoman said the ad refers to what life would be like for those who chose a public plan – such profits and generous pay wouldn’t be a part of a public health plan. That doesn’t mean, however, that health insurance company profits would completely disappear, as the ad suggests. That would be true only if a public plan displaced all private insurance. As we stated in an earlier article, when a group on the other side of the debate claimed that a public insurance plan would force 119 million Americans off of private insurance and leave “government in control of your health care,” that’s not likely to happen.

Furthermore, government-run programs are hardly without their own money issues. The Government Accountability Office reported that in 2008 half of improper payments made by the federal government came from Medicare and Medicaid. The Medicare fee-for-service program had an estimated $10.4 billion in improper payments, plus Medicare Advantage doled out $6.8 billion that it shouldn’t have. Medicaid’s improper payments totaled $18.6 billion for the year. Those figures surpass the profits reaped by insurance companies and the pay their CEOs took home.

High-Priced Premiums

The ad goes on to claim that “the endless denials” and “the soaring co-pays and premiums” would also vanish. But would they?

A June report by HCAN lists numerous investigations, court cases, settlements and personal anecdotes involving health insurance companies’ denial of coverage. Top health insurance companies recently told Congress that they wouldn’t stop canceling coverage for some sick customers, a practice criticized by both Democrats and Republicans. And certainly there are plenty of individual stories of medication and procedures being denied by insurance companies. HCAN’s spokeswoman pointed out that Obama has called for rules that would forbid insurance companies from rejecting customers based on preexisting conditions. Still, it remains to be seen whether certain drugs or procedures wouldn’t be denied to customers under a public plan as well. In fact, the criticism from conservatives has been that a public plan would be stingy in what it would cover in an effort to control costs. We can’t predict the future, but we find it unlikely that at least some denials wouldn’t take place no matter who is issuing insurance.

What about those “soaring” premiums? Health insurance premiums do continue to rise. The Kaiser Family Foundation reports that premiums for workers increased by 5 percent in 2008 and have doubled since 1999. In that same time period, they’ve outpaced the increase in wages (up 34 percent since 1999) and inflation (up 29 percent).

But a graphic on screen shows a monthly premium bill climbing to more than $600. It’s certainly possible that some families pay that much each month — nongroup (or individually purchased) policies vary greatly but can run as high as $9,201 for the year, according to the Kaiser Family Foundation. But the average monthly payment for workers with employer-sponsored coverage is a more modest $280 for a family policy.

Democrat on Democrat Violence

The liberal MoveOn.org Political Action has more specifically focused its efforts. The group has released a radio ad attacking Democratic Sen. Mary Landrieu of Louisiana for not supporting a health care bill that would include an “option to join a high quality public health insurance plan.” Indeed, Landrieu recently said that she doesn’t think a public option is the “right way to go.” She left herself only a bit of wiggle room by saying she is “open to a compromise.”

Moveon.Org Political Action Radio Ad

[TET ]

Narrator: Why is Mary Landrieu opposing the President’s plan to provide health care choices for all Americans, including the option to join a high quality public health insurance plan? Is it:A. Because Americans trust the private insurance industry?
B. Because we don’t want high-quality, lower cost care?
Or C. Because our health care system works just fine as it is?
Of course not. It’s none of the above. But she did receive $1.6 million in campaign contributions from the health care industry – the same industry that’s now spending millions to stop the president’s plan.
Call Mary Landrieu at 202-224-5824 and tell her you want high quality, affordable health care choices. Tell her to support a public health insurance option. [/TET]

MoveOn implies that Landrieu’s views are shaped by the “1.6 million in campaign contributions from the health care industry” she received. The support MoveOn sent us for the claim shows that the group took this figure from a Huffington Post article that refers to the Center for Responsive Politics’ political contribution database.

We checked the CRP database ourselves and found that it credited Landrieu with receiving a smaller total, about $1.3 million in campaign contributions from the “health sector.” The Huffington Post’s calculations include slightly higher totals for various industries than CRP and also include the “insurance” industry, which CRP lists as part of the financial and real estate sector. Not all donations from the “insurance” industry would come from health insurance companies.

Additionally, some contributors in the “health” sector are in favor of the same health care changes as MoveOn. Part of Landrieu’s haul comes from the American Nurses Association, a group that has expressed support for a public plan option.

MoveOn also neglects to mention that these contributions were made over the course of a 20-year period.

– by Lori Robertson and Justin Bank

Sources

Centers for Medicare & Medicaid Services. NHE Fact Sheet. 11 Mar 2009, accessed 23 Jun 2009.

U.S. Government Accountability Office. “Improper Payments: Progress Made but Challenges Remain in Estimating and Reducing Improper Payments.” 22 Apr 2009.

Girion, Lisa. “Health insurers refuse to limit rescission of coverage.” The Los Angeles Times. 17 Jun 2009.

Kaiser Family Foundation. Press release. “Yearly Premiums for Family Health Coverage Rise to $12,680 in 2008.” 24 Sep 2008.

Kaiser Family Foundation. “How Non-Group Health Coverage Varies with Income.” 4 Feb 2008.

Health Care for America Now. “Premiums Soaring in Consolidated Health Insurance Market.” May 2009.

Health Care for America Now. “Health Insurance Company Abuses : How the Relentless Drive For Profit Endangers Americans.” June 2009.

U.S. Securities and Exchange Commission Web site. SEC.gov. accessed 23 Jun 2009.