The Wonk Room

Why The AMA Should Support A Public Health Insurance Option

As President Obama prepares to address the American Medical Association on Monday, America’s largest physician organization — which has so far avoided criticizing the Democrats’ reform efforts — has registered its opposition to the public health insurance plan. In comments submitted to the Senate Finance Committee, the group argued that the option was not “the best way to expand health insurance coverage and lower costs“:

The A.M.A. does not believe that creating a public health insurance option for non-disabled individuals under age 65 is the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.

But the AMA, which has a long history of opposing the enactment of Medicare and other health reform legislation, does not speak for all doctors. Many in the provider community would welcome an option that eliminates unnecessary hassle with private insurance companies, provides timely and adequate pay, and spearheads payment methods that reward providers who offer quality care in an efficient manner.

As Doctors for America — a grassroots organization of doctors dedicated to health reform– argues, “one of the critical features of competition between public and private plans is that in addition to competing for patient participation, plans have to compete for physician participation as well.” Indeed, if public plans institute rock bottom rates that aren’t accepted by health care providers, “Americans having a choice of private plans alongside the public plan would not opt for the latter, which would then either whither away or have to raise fees until it is competitive in the market for enrollees.”

To attract medical providers, the public plan would have to deliver timely, adequate, and efficient payments. As CAPAF Senior Fellow Peter Harbage recently pointed out, “if providers were sure that the public health insurance plan would make timely adequate payments absent the paperwork gimmicks (such as pre-authorization) used by insurers today,” they would likely participate in the program.

Currently, “physician practices report that overall the costs of interacting with insurance plans is $31 billion annually and 6.9 percent of all U.S. expenditures for physician and clinical services.” Approximately “one-third of the average primary care physician’s compensation is spent on physician practice-health plan interaction”:

On average, physicians spent three hours a week or nearly three weeks per year on these activities, while nursing staff spent more than 23 weeks per physician per year, and clerical staff spent 44 weeks per physician per year interacting with health plans. More than three in four respondents said the costs of interacting with health plans have increased over the past two years.

All this paperwork sometimes prevents patients from receiving the care they need. Doctors frequently have to haggle with insurers over denied payments, preauthorizations, or other administrative barriers. A new public plan could eliminate this unnecessary requirements and allow doctors to focus on delivering the best quality care to their patients.