Sunday, September 27, 2009
CBO says the Public Option will save big bucks
As much as $100 Million over a plan with out it.
The original House bill required the public plan to pay providers 5 percent more than Medicare reimbursement rates. But as part of a package of concessions to Blue Dogs, the House Energy and Commerce Committee accepted an amendment that requires the HHS Secretary to negotiate rates with providers. That version of the plan will save only $25 billion.Gee, just like we have been saying all along. Who would have thought that could be?
In total, a public plan based on Medicare rates would save $110 billion over 10 years. That is $20 billion more than earlier estimates, a spokesman for House Speaker Pelosi said...
..The public plan saves money because it pushes down premium prices. Lower premium prices across the country would mean the government would have to pay less in subsidies to low-income people who buy insurance through the exchange, according to CBO. Medicare rates are typically lower than those paid by private insurers, so using that formula would allow the public plan to charge considerably lower premiums to stay solvent. If the government has to negotiate the same way insurance companies do, public plan premiums likely won't be as low -- hence less savings.
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