Bill Creates a Public Option to Compete With Private Insurers; Saves $68 Billion from 2014 to 2020

WASHINGTON – At a news conference Thursday, Rep. Lynn Woolsey, D-CA, announced the introduction of her bill to establish a robust public option in the health exchanges created by the Affordable Care Act.

Reps. Pete Stark, D-CA, Jan Schakowsky, D-IL, and others among the 128 original cosponsors joined her in discussing the bill, which was introduced Wednesday.

According to a new study by the non-partisan Congressional Budget Office (CBO) released Thursday, the robust public option would save $68 billion from 2014 to 2020.

CBO also estimates that the public option would have, on average, premiums 5 to 7 percent lower than private plans in the exchanges.

“As the deficit continues to grow, so does the need for a program that can save billions of dollars and improve health care while doing it.,” said Woolsey.

The savings could be used to make insurance more affordable but also to reduce the deficit or to off-set the cost of other Congressional programs.

Rep. Pete Stark, Chair of the House Ways and Means Health Subcommittee, pointed to a report from Consumers Union that Blue Cross Blue Shield plans have amassed billions in surpluses as they raised rates for millions of Americans.

“This is a good example of why we need a public option – to create an insurance plan that competes based on delivering quality, efficient care, not on delivering profits to shareholders,” he said. “The result is more competition, better coverage, and lower premiums for millions of Americans."

Rep. Jan Schakowsky noted that United Health Group -- the country's largest managed care company – just posted a 31% increase in second quarter net income while spending more on administrative costs and less on medical care.

“If a less expensive public option were available, UnitedHealth Group would face real competition, forcing them to think twice about charging excessive rates, and driving down costs,” she said.

Woolsey noted that “the power of the public option lies in the lower-cost competition it would offer private health insurance plans within the health exchanges. It would charge lower premiums because it would not be profit-driven and would have much lower overhead than private insurers.

Text of the bill, H.R. 5808, is available on-line.

The new CBO study is posted at its website.