A public health insurance option for middle-class families could help cover the uninsured, but it may well put private insurers out of business, a respected consulting firm concluded in a study released Monday.
The report by the Lewin Group, a numbers-crunching firm that serves government and private clients, said it all depends on details that lawmakers are far from deciding. Nonetheless, the report could provide ammunition for critics who say a public plan would move in the direction of government-run medicine.
President Obama and many Democrats want to create a government insurance plan to compete with private plans that now cover about 170 million Americans. The issue is a major sticking point for Republicans and the insurance industry.
The Lewin study found that if such a plan were open to all employers and individuals, and if it were to pay doctors and hospitals the same as Medicare, the government plan quickly would grow to 131 million members, while enrollment in private insurance plans would plummet.
“The private insurance industry might just fizzle out altogether,” said John Sheils, a Lewin vice president and leading author of the study.
By paying Medicare rates, the government plan would be able to set premiums well below what private plans charge. Monthly premiums for family coverage would be $761 in the government plan, compared with an average of $970 in private plans, the study estimated. Employers and individuals would flock to the public plan to cut costs.
But Mr. Obama hasn't spelled out in detail what he would like to see in a public plan. As a candidate, he said it would only be open to small employers, individuals and the self-employed.
When Lewin ran the numbers for that limited scenario, the results were not as sweeping.
A public plan for small employers and individuals that paid Medicare fees would have nearly 43 million members. If it were designed like a private plan, paying higher fees to doctors and hospitals, it would only enroll 17 million members.
The study found that the public plan would help reduce the number of uninsured by about 24 million to 28 million people, depending on how it was designed. A main reason not all of the estimated 48 million uninsured would be covered is that Obama's health care proposal doesn't require all Americans to get coverage.
Mr. Sheils said the study is meant to give lawmakers a feel for the options. “Our paper is more or less written as a 'how to' manual,” he explained.
Government programs now cover seniors, many children and the poor.