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Larry McNeely

The following is my open letter to Senator Ron Wyden of Oregon from the U.S. Public Interest Research Group endorsing his Health Care Free Choice Amendment, which contains proposals necessary for effective health care reform that guarantees an array of affordable insurance exchange options for all Americans.


Dear Senator Wyden,

U.S. Public Interest Research Group (U.S. PIRG) and our affiliates, the State Public Interest Research Groups, have a thirty-five year history of standing up for consumers and taxpayers against powerful special interests. Throughout this year's health care reform debate, U.S. PIRG has advocated for policies that would offer consumers better choices and lower health care costs. Consistent with our history and priorities, I write to you today to express U.S. PIRG's support for your "Free Choice" proposal.

As you know, a central feature of the health reform legislation now before Congress is the creation of health insurance marketplaces called exchanges. By allowing enrollees to pool their bargaining power and purchase health insurance coverage in large, well-regulated markets, these exchanges will allow consumers to get their coverage at a lower cost than they would on their own. Also, by offering an array of high-quality choices too frequently absent from today's insurance marketplace, exchanges will help lower costs by fostering competition in health insurance coverage. Finally, the exchanges offer a strong mechanism for portability, since enrollees' coverage would not necessarily change when they leave their existing job or start a new one.

Unfortunately, the existing health reform bills confine participation in these exchanges to individuals, employees of small businesses that opt to provide coverage through an exchange, and those workers whose employer does not offer creditable, affordable coverage. Employees of small businesses that offer their own creditable health coverage plans and most employees at larger firms would continue to receive only the options offered by their employers.

By progressively opening up the exchanges and allowing employees to opt into their employers' plan or, alternatively, take their pick of any of the offerings on the exchanges, your Free Choice plan will greatly expand the coverage options available to Americans with employer-provided coverage. Your proposal will dramatically increase the number of Americans who are able to choose a plan that fits their needs. Allowing an employer's contribution to follow an employee via a voucher will ensure that employees' choices will not be overly constrained.

In addition to expanding choices for consumers, your Free Choice proposal would make other significant improvements to the effectiveness of the broader health reform legislation:

  • Widening exchange eligibility will help these employees purchase portable insurance coverage that can stay with them through employment changes.
  • A larger number of individuals participating in the exchanges will enhance bargaining power and generate greater risk-pooling, thereby leading to lower premiums for all exchange participants.
  • By expanding the number of Americans receiving coverage through the exchange, your proposal would expand the number of Americans who would have access to any proposed public plan. The added economies of scale and market power would make the public option an even stronger competitor to private insurers, driving down costs for all consumers.

As your proposal acknowledges, opening up more choices does create a risk of adverse selection, if a disproportionate share of sick employees decided to opt either for exchange or employer coverage and thereby drove up premiums. Commendably, the Free Choice proposal mitigates against this risk by creating a reinsurance mechanism to protect businesses and insurers that may experience higher-cost risk pools. As you move forward with your proposal, we urge you to ensure that this important policy element remains adequate to its task.

On behalf of U.S. PIRG's members and affiliates, I thank you for your leadership on this important issue and look forward to working with you and your office to ensure that your Free Choice proposal takes its place in the final health reform legislation.


Larry McNeely

Health Care Advocate

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