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June 26, 2009


Steffie Woolhandler, NY Times letter - A public plan option that competes with private insurers won't fix health care. Competition in health insurance involves a race to the bottom, not the top. Insurers compete by not paying for care: by seeking out the healthy and avoiding the sick; by denying payment and shifting costs onto patients. These bad behaviors confer a decisive competitive advantage; a public plan would either emulate them - becoming a clone of private insurance - or go under.

Moreover, the savings on overhead from a public plan option are far smaller than you suggest. While it might cut insurers' profits (which is why they hate it), that's only 3 percent of the roughly $400 billion squandered on health bureaucracy annually.

Far more goes for armies of insurance administrators who fight over payment, and to their counterparts at hospitals and doctors' offices - all of whom would be retained with a public plan option. In contrast, a single-payer reform would radically simplify the payment system and redirect the vast savings to care.


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