Senate Democrats' healthcare 'public option' would cover only 4 million people

A proposed government-run health insurance program, among the most divisive issues in the health care debate, would cover less than 1.5% of the population, new estimates show.

The latest version of the "public option," included in the 10-year, $848 billion health care bill headed toward an initial Senate vote Saturday, would cover up to 4 million people, according to the Congressional Budget Office report released late Wednesday night.

The issue remains among those that have prevented Senate Majority Leader Harry Reid from securing the 60 votes he needs to pass the bill.

Paul Ginsburg, an economist with the Center for Studying Health System Change, questions the impact the public option proposals would have on families seeking health coverage.

"The type of public option we're talking about today … is all about ideology and symbolism," he said. "It's not going to have any impact on our health system."

Reid, D-Nev., scheduled a weekend vote to determine whether the Senate will begin debate on its health care plan, which includes a public insurance program that individual states could choose not to offer residents.

The public plan was conceived as a separate insurance policy that would operate like Medicare, the government-run health program for seniors. President Obama has said a public option would "keep pressure on private insurers to keep their policies affordable."

Under the House and Senate bills, the government option would be available only to people who shop for insurance on their own — meaning they don't get coverage through work — or who work for small companies. The plan would be offered alongside private policies in online "exchanges" that would let people compare coverage and prices.

Like private insurers, the public plan would be funded through premiums. Republicans and some Democrats, including Sen. Ben Nelson of Nebraska, say its non-profit status would give it an unfair advantage. "A government plan is eventually going to crowd out the private insurance companies' plans," said Sen. Kay Bailey Hutchison, R-Texas.

The public plan included in the House bill would cover 6 million people, the Congressional Budget Office predicted. The analysis predicted that the public plan would attract less-healthy patients and that its average premiums would be "somewhat higher" than private plans.

The Senate bill would let states opt out of the public plan. States that are home to one-third of the population would be likely to do so, the CBO predicted.

Jacob Hacker, a Yale University political scientist who first proposed the public option, said the plan would still drive down health care costs despite the changes. For one thing, he said, it would offer consumers another choice in rural parts of the country where only one or two insurers offer policies.

Insurance companies oppose the program. Karen Ignagni, head of the trade group America's Health Insurance Plans, says the public plan would underpay doctors, forcing them to shift the cost to patients with private coverage.

Under pressure from fellow Democrats, Reid and House Speaker Nancy Pelosi, D-Calif., reduced the plan's power. Unlike Medicare, which decides how much to pay doctors for services, the public plan would negotiate with doctors as private insurers do.