A Project of The Annenberg Public Policy Center

The “Government-Run” Mantra

The claim that the House bill would amount to "government-run health care" suffered a blow last week, when the Congressional Budget Office estimated that the so-called "public plan" in the revised bill wouldn’t offer much in the way of competition to private insurers. But that hasn’t stopped Republicans from repeating the claim.

For several months, we’ve been debunking assertions that Democratic health care bills call for a Canadian or British-type system in which everyone is insured, or insured and cared for, through the government. None of the bills being debated in Congress call for such a single-payer system. Conservative groups have also claimed that a federal health insurance plan would be the death knell for private insurance, offering a much cheaper alternative and eventually leading to "a government-run system." As we’ve written, how competitive the "public plan" would be depends greatly on how it’s structured. And the latest iteration in the revised House bill isn’t expected to have much of an impact on private insurers, according to the nonpartisan CBO and an independent analysis of this scenario.

But Republicans are still recycling "government-run" claims and old analyses that don’t pertain to the bill. House Minority Leader John Boehner was saying back in June that the House bill "is a complete government takeover of our health care system," and again last week, Boehner told Fox News that the revised House bill is "nothing short of a complete government takeover of our health care system." Boehner partly blamed the federal insurance plan for the takeover, saying, "you’re going to drive every private health insurance company out of business."

The congressional Republicans’ Web site further claimed that the House bill would create "a new government-run health plan" that "would cause as many as 114 million Americans to lose their existing coverage," according to the Lewin Group. But that’s not what the Lewin Group said at all. The GOP cherry picks this number from a months-old Lewin Group study that’s based on an early version of the House bill (and the assumption that the "public plan" would be open to everyone). Lewin’s estimates of how many would leave private plans in favor of a federal option, structured as it is in the latest House bill (as well as the version that came out of the Energy and Commerce committee), are 90 percent lower than that. The Lewin Group is a subsidiary of UnitedHealth Group but says it operates with "editorial independence."

The early House bill called for a federal insurance plan that would pay health care providers at Medicare rates, which are 20 percent to 30 percent less than what private plans pay on average, according to the Lewin Group. If this type of federal plan, which would be substantially cheaper than private insurance, were open to everyone within three years, it could lure as many as 114 million away from private insurance, Lewin estimated. The revised bill calls for a federal plan that pays negotiated rates, putting its premiums in line with those of private plans.

The Lewin Group has not released an analysis of the latest House bill, but it did model what would happen under a similar situation, with a federal plan paying negotiated rates. Lewin found that such a plan would result in 10.4 million to 12.5 million people moving off of private plans, in favor of the "public option." Why the big drop? Because those with private insurance wouldn’t save much money, if any, by switching to the federal plan.

CBO analyzed the revised House bill, and it came up with even lower numbers. CBO estimated that 6 million Americans total would join the so-called "public plan" by 2019 — and that premiums would be "somewhat higher" than the average private plan premiums offered through an insurance exchange. CBO said the plan would be most attractive to the less healthy members of the population, forcing premiums higher, despite the fact that the federal plan would save some money on administrative costs.

CBO: [A] public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the “risk adjustment” procedures that would apply to all plans operating in the exchanges.)

In any case, whether 6 million people take up the "public plan" (CBO) or 12 million (the Lewin Group’s high-end estimate), neither number comes close to backing up the GOP claim that this bill would "drive every private health insurance company out of business" and result in "government-run" health care.