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AARP's SHAARP Session blog dispels common health reform mythsFiguring out health reform: Health Exchange, public option
Here are three questions we're hearing from members about health reform:
Question: I hear a lot of talk about a “Health Exchange” and a “public option.” How would these things affect my health care – and our country’s future?
The Health Exchange (also called a Health Benefit Gateway in some Senate versions) is part of the health-care proposals now before Congress. Some observers think it’s the most important element of health-reform proposals.
The concept is to use the power of a competitive marketplace to help you find more affordable coverage and to control the spiraling costs of health care.
The Health Exchange would be a central clearinghouse where people who currently can’t find insurance – because their employer doesn’t offer health benefits, because they are uninsurable because of pre-existing conditions, or because it just costs too much – could get access to good-quality, affordable health coverage.
Some six out of 10 U.S. workers get coverage through their employers. Under both House and Senate proposals, you could buy insurance through the Health Exchange (whether public or private insurance) only if you don’t get insurance through your employer, Medicare, Medicaid, TriCare or through a federal workers’ health benefits plan.
But what about the rest of us? Some 73 percent of people who shop for private health coverage say the plans they find are too expensive for them to afford.
Both House and Senate versions of health-reform legislation try to address this problem through a Health Exchange or similar mechanism. People without workplace health benefits could seek health coverage through standardized health-coverage plans offered through a Health Exchange. Coverage and prices would be clearly spelled out, encouraging insurers to compete on price and quality of service.
Under current House and Senate proposals, insurers would have to meet tough quality standards as well. Insurers wouldn’t be able to deny you coverage if you had a pre-existing condition, or drop you if your care became expensive, or refuse to renew your policy. In fact, these same rules would apply to all health insurance, not just Health Exchange policies – which eliminates one reason why insurers shun these customers today and try to “cherry-pick” people with the lowest risk.
The idea is that insurers would have to compete more effectively on price, service and coverage.
There is broad bipartisan agreement that any health-care reform package has to cover more of the uninsured, and there has been broad bipartisan agreement that a Health Exchange may help encourage competition. Massachusetts already has a similar program, signed into law by former Gov. and former GOP presidential candidate Mitt Romney.
Everyone is affected by the rising number of uninsured. Experts say the high number of uninsured people in America – much higher than in any other developed nation, even though America spends twice as much on health care per capita than the average developed nation – is a symptom of a sick health coverage system.
As more and more people find health coverage unaffordable, more or and more costs are shifted to those who still have insurance. This drives up our health premiums – the average family pays about $1,100 per year in health costs to subsidize the care of the uninsured – which drives more and more people to do without coverage, which drives up families’ costs even more. It’s been called a “death spiral.” Except for a period in the mid-1990s, health costs have risen faster than overall inflation for the last 40 years. More than any other factor, this fact is what makes our current health system unsustainable.
Question: OK, what would a “public option” do? And why is it so controversial?
First, it’s important to note that debate on this issue is still unfolding in Congress.
But here is what the current discussions focus on:
As currently proposed, a public option would compete for customers, side by side with private insurers in the Health Exchange. Consumers would be able to decide which option they wanted to buy.
Some advocates of health reform insist that the only way to make insurers compete on price is to create a public organization that would sell insurance through the Exchange. Since this entity wouldn’t have to make a profit, it could offer lower costs on health coverage.
Many critics of this option say that private insurers wouldn’t be able to compete with a public option, and would eventually be driven out of the insurance market.
However, the non-partisan Congressional Budget Office disagrees. The CBO says that after 10 years of reform, the number of people covered by private employer-sponsored coverage would actually grow. (See Page 1 of the attached table on this report.)
Question: Would health reform really help reduce the number of uninsured?
Most observers think it would. You could choose not to buy any coverage through the Exchange – but those with no qualified coverage, either through their employer or through the Exchange, would pay extra taxes to help cover their costs when they become ill. The concept is to stop the uninsured from driving up everyone else’s costs. The Congressional Budget Office projects that current health-reform plans would cut the number of uninsured drastically. The CBO says at least 94 percent of Americans would have health coverage by 2019, up from 81 percent today.
AARP has not taken a position on the public option. AARP’s all-volunteer, unpaid Board of Directors set policy for the Association. The Board has said that it could support a health-reform bill with a public option if it encouraged market competition, held costs down and ensured choice. Equally, AARP could support a health-reform plan with no public option if the overall plan met these tests.
AARP’s bottom line is clear: We will fight for our members and their families to ensure that seniors get the Medicare benefits they have earned, and that Medicare will be strong for those who need it when they grow older.
No American, regardless of health or medical history, should be denied health care based on their age or pre-existing conditions.
Protecting your health care should not take a back seat to insurance-company profits.
And no one – not the insurance companies and not the government – should get between you and your doctor.
AARP is urging Democrats and Republicans to work together to fix what’s broken and preserve what’s right about our health-care system this year.
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