To the Editor:
Re “A Public Health Plan” (editorial, June 21):
I take issue with some of your editorial’s statements regarding the health reform debate.
You say that “a public plan would have lower administrative expenses than private plans.”
Private insurance plans average about 12 percent in administrative costs. While Medicare is always cited as a model of administrative efficiency at approximately 5 percent, it is a poor example because it is administered by the private sector, not the federal government.
A much better example would be government health programs like Medicaid, Champus and state CHIPs that are administered by federal, state and municipal authorities. These plans average 26 percent in administrative costs, according to a 2008 Congressional Budget Office study.
You also claim that a public plan would have “no need to generate big profits,” with the implication that insurance companies are cash machines operating on huge profit margins. Nothing could be further from the truth.
According to a 2006 PricewaterhouseCoopers analysis, 86 cents of every premium dollar goes directly toward paying for medical services. Eleven cents goes to administrative costs. This leaves 3 cents for profit.
Why do we continue to focus our attention on trying to fix something that isn’t broken with money we don’t have, only to saddle our future generations with the bill?
Pete Petersen
Des Plaines, Ill., June 21, 2009
The writer is an employee benefits consultant for small employers.
Note from KBJ: The progressive mind wants uniformity and control. It views markets as chaotic.
