If the health care industry is serious about working with the president, it would support public insurance. 

Representatives of the insurance, hospital, and the pharmaceutical industries pledged recently to work with President Barack Obama to reduce skyrocketing health care costs by $2 trillion over the next 10 years.

The acknowledgment that simple reforms can add to trillions in saving is a startling admission from the insurance industry, especially when you consider the fact that tens of thousands of Americans die every year due to a lack of coverage.

Surely, insurance companies are not making this offer out of the kindness of their hearts. More likely, this announcement is just the first step in a new campaign to oppose real reform.

Insurance companies realize that a plan for universal health care is coming and that support for real reform is now so strong that even legions of lobbyists and millions of dollars in attack ads can’t hold it off much longer.

They may be hoping to repeat a trick that worked in the 1970s, when the medical establishment promised a “voluntary effort” to reduce health care costs in order to avoid new federal regulation. Despite their promises, costs went down for only one year and then quickly resumed their steep upward trend.


In the 1990s, the insurance industry argued that federal health care reform wasn’t necessary, this time because HMOs would solve the problems of access and cost. We all know how that turned out.

Now, again, the insurance industry may be planning to push for voluntary, temporary measures rather than real reform.

Luckily, there is a way to make sure these promised cost reductions actually do occur – by pairing them with a public health care plan, an important part of President Obama’s strategy for reform. A public health insurance option will prove just how much easier it is to cover more Americans when you aren’t pocketing millions of dollars in profits.

Currently, 15 to 20 percent of the price of a private plan goes to administrative costs, advertising and profits. In contrast, Medicare only spends about three percent on overhead. The difference between 20 percent and 3 percentis the first place the private insurance industry should look to find savings.

A public plan will compel the insurance companies to reduce their costs, but more important, it will provide much-needed stability for American families at a time when family budgets are anything but stable. A public health insurance plan will always be there, just like Medicare is for seniors and for people with disabilities. Unlike private insurance companies, it won’t close, merge, or randomly deny claims or hike rates while denying consumers any recourse.

A public plan will also be there for families who suffer a job loss, preventing bankruptcies and foreclosures caused by medical costs and helping our communities to dig our way out of the economic recession.


Anyone who has struggled with the lack of affordable health insurance in this country knows better than to believe that anything short of a publicly guaranteed health care option can move our country towards universal coverage. The recent economic collapse has proved with startling clarity that we cannot trust profit-driven multi-trillion dollar corporations to care about much more than next quarter’s profit margins.

Right now, we have a window of opportunity to win guaranteed public coverage for everyone in America. A recent poll found that nearly three out of four voters support a public option. Americans have had enough of our broken health care system and they know that any reform plan that leaves the private insurance industry at the helm won’t be real reform at all.

The offer by the insurance, drug and hospital industries to contribute to bringing costs down is long overdue, but to bring about real reform we need to rebuild the health care system’s engine, not just slap on a new coat of paint. We need a public plan that is guaranteed and accountable to the people whom it will serve. Almost every other industrialized nation in the world is ahead of us on this one. It’s time to catch up.

Jesse Graham is the executive director of the Maine People’s Alliance.

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