House Democrats Reveal Their Health Care Reform Plan
Thursday, October 29, 2009SUSIE GHARIB: House Democrats today officially wrote their prescription for health care reform. The plan includes a government-run option for uninsured Americans. All told, it promises to provide insurance coverage for 36 million more Americans. As Stephanie Dhue reports, the price tag is big, maybe much bigger than at first glance.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Appearing in front of the capitol to cheering crowds, House Speaker Nancy Pelosi touted the $894 billion plan.
NANCY PELOSI, HOUSE SPEAKER: The bill will expand coverage, including a public option to boost choice and competition in the health insurance reform.
DHUE: The House bill allows for $2 billion to set up a public option that would negotiate reimbursement rates with doctors and hospitals. But it may take much more than that if it is required to also have what's called risk capital.
CORI UCCELLO, SR. HEALTH FELLOW, AMER. ACADEMY OF ACTUARIES: This is the capital that's needed to help plans avoid insolvency. Risk capital is used if the premiums coming in and paying for the plan are not enough to cover the claims going out as well as the expenses.
DHUE: In a report to be released on Monday, independent actuaries figure it will cost half a billion dollars in administrative costs to set up a public plan. They looked at two different scenarios for how much it would take to support the plan. If enrollment in the public option is low, covering two million people, it would need up to $3 billion in risk capital. But if enrollment is high, covering 40 million people, then it would need up to $41 billion in risk capital. Cori Uccello of the American Academy of Actuaries says just how much will be needed depends on how accurately the plan prices premiums.
UCCELLO: If the plan is under priced, then there is more likelihood that there is going to be insolvency, so you need another capital infusion. You need higher, more capital to cover, to make sure that you're covering the claims and expenses that are incurred.
DHUE: Another factor is how much it will cost to treat the newly insured. Gail Wilensky, who ran Medicare in the early 90s, worries if costs are high, the government will take money from providers.
GAIL WILENSKY, SENIOR FELLOW, PROJECT HOPE: What it does first is whack at prices, at the reimbursement that it provides to physicians and hospitals.
DHUE: Late this afternoon, the Congressional Budget Office said it expects six million people to enroll in a public option plan and that plan would have higher than average premium prices. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
