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CBO Slams GOP Claim on Public Option and Employer Coverage

July 28, 2009

To be sure, the preliminary analyses from Congressional Budget Office (CBO) have not always bolstered the Obama administration's case for health care reform. But on one vital issue - the impact of the so-called "public option" on employer-provided health care in the U.S.- the CBO numbers backed the administration's case and decimated another Republican talking point.
Even as a bipartisan group of Senate Finance Committee members reportedly reached a deal that would remove the public option from its version of a health reform bill, the CBO reported its initial analysis showed the public plan would boost the number of Americans enrolled in employer-provided programs. (The dramatic decline in workplace coverage is one of the key factors swelling the ranks of the uninsured - and underinsured.) As CNN noted:

A separate budget office report made public Monday found that a health care reform bill that includes a public option sought by Democrats would result in 3 million more people enrolled in employer-sponsored coverage by 2016, compared with what would happen under current laws. The report, responding to questions from Rep. Dave Camp, R-Michigan, was not a final review, the office said.

That is a far cry from the demagoguery of Karl Rove and virtually the entire Republican leadership in Congress based on an April study from the Lewin Group, a supposedly non-partisan outfit owned by private insurer UnitedHealth. (This Rachel Maddow compilation is particularly jaw-dropping, starting at about the 2:10 mark.) Back on June 11, Karl Rove made the bogus case in a WSJ column simply titled, "How to Stop Socialized Health Care."

"The Lewin Group estimates 70% of people with private insurance -- 120 million Americans -- will quickly lose what they now get from private companies and be forced onto the government-run rolls as businesses decide it is more cost-effective for them to drop coverage. They'd be happy to shift some of the expense -- and all of the administration headaches -- to Washington. And once the private insurance market has been dismantled it will be gone."

Of course, conveniently omitted by Rove and his parrots in the Republican Party are some inconvenient truths about that April analysis by the Lewin Group. First, its study looked at several scenarios for the design of a public option for health care. These projected as many as 120 million and as few as 10 million Americans switching plans given the availability of a lower cost government alternative. Importantly, not only did the Lewin scenarios not correspond to any of the legislation supported by either the Obama White House or Democrats in Congress, that 70% figure is based on the public plan enrolling everyone and offering the same fees to providers as Medicare; a proposal being advanced by no one at this time. As Politifact noted:

But there are other ways to set up a public option health care plan. Under the Lewin Group's estimates, if you restrict a Medicare-style public option only to individuals and small businesses, only 32 million would leave private coverage. And if the public option is less like Medicare and competes more like a private insurer, the number drops further.

Which is exactly what the CBO found. In fact, as Reuters reported, the mandate for individuals to obtain health insurance would pressure employers to provide, a benefit made more affordable by the existence of the public option:

The CBO report estimated only about 10 million to 11 million people would sign up for the public option by 2019, far fewer than the 83 million cited in another analysis by the Lewin Group. The Lewin Group is part of Ingenix, a wholly-owned subsidiary of UnitedHealth Group (UNH.N).
The CBO report also estimated that about 12 million people who otherwise would not be enrolled in employer-based plans would fall under the Democratic proposal because the mandate for individuals to be insured would increase workers' demands for employer-based insurance...
"For several reasons, we anticipate that our estimate of the number of enrollees in the public plan would be substantially smaller than the Lewin Group's, even if we assumed that all employers would have that option," CBO said.

None of which is to suggest the Obama administration is getting a free ride from the non-partisan CBO. The latter's premature, incomplete analyses of the costs of different Democratic plans in Congress provided ammunition for Republican water carriers. And the dust-up over the savings from a proposed MedPAC panel has produced a spirited response from OMB director Peter Orszag, himself the previous CBO chief.
In any event, the new CBO numbers don't bode well for the health of future Republican citations of the Lewin Group, which should be dead on arrival. But as we have learned time and again, Republican talking points are immortal.
(For more on the implications of GOP obstructionism, see "The Republican 10 Point Plan for Health Care.")
UPDATE: Satirical Political offers its own unique take on the GOP and the public option


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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