The proposed national health insurance plan has said it will price its products competitively or slightly below private insurance pricing. This could be a very tricky exercise. For example, in Westchester County, NY, a 25 year old male buying a PPO policy would pay between $1200-1500 per month. Up the stream in Stamford, CT, a 25 year old male could buy a similar policy for $100-$150 per month. Where will the government price its policy for 25 year old males? Will the government plan be subject to state regulations, state mandated benefits, state regulatory compliance, state premium taxes, graduate medical education fees, income taxes, or any of the other wide array of fees that today’s health plans pay? Actually, health plans don’t pay those fees. They pass them onto consumers, thereby raising the cost of health insurance.
A better question is how will the national health insurance plan save money over the competition? Reduced administrative fees? If all the national health plan does is reduce administrative fees, it will be an enormous failure, because today’s problem is not administrative fees. It is the 10-15% medical cost trend that occurs every year in both Medicare and private insurance. You can cut administrative fees that average 10-15% in the health insurance industry to 0, but a year later you’d have the same problem because the other 85% of the medical cost went up 10-15% and boom! You have the same problem. So, before we jump onto the national health care plan bandwagon, we probably should know how plans are going to be priced, and, secondly, the cost of those plans, other than what they do in Medicaid and Medicare, which has ratcheted down fees to doctors and hospitals.