"If Americans are forced to continue to depend on the private market for health insurance," the report warns, "insurers will continue to drive prices as high as they want with no fear of decreased demand - and consumers will continue to suffer from escalating rates and worse coverage."

The solution, the report and its sponsors say, is a public alternative: a government-sponsored health plan that, without built-in profits or excessive administrative costs, and with better benefit designs and a smart pay structure, can cover Americans at a lower cost.

That idea, which is fast gaining traction in Washington but is also fiercely opposed by private insurers willing to grant President Barack Obama most other reforms to avoid it - wouldn't shut down the private market, as single-payer plans would. Instead, it would force private insurers to compete with what advocates predict would be lower-cost, higher-quality public coverage.

"Private health insurance companies have proven year after year they'll do whatever they want when left to their own devices," Asen said. "It's time for real comprehensive reform that includes regulation and the choice of a public health insurance plan so we are no longer at the mercy of the private health insurers in Rhode Island."

In a news release about the report, both Sen. Sheldon Whitehouse, D-R.I., and Rep. James Langevin, D-R.I., stopped short of directly endorsing that approach, but they both expressed support for reforms toward those goals. "We can no longer afford to rely on a system of fractured health coverage, limited choice and soaring costs," said Langevin.

But Blue Cross President and CEO James E. Purcell, who has been a prominent voice in reform debates locally and nationally, and has made Blue Cross a partner in several efforts to improve care and change the health care delivery and reimbursement system, took exception.

In a written statement, he said the nation's health care system "is fundamentally flawed," and it needs to change to "reward quality of care and improved health outcomes, rather than merely reward the number of services provided."

Blue Cross also supports "the concept of universal coverage and the need to reform the current health care system," he added, "and we are encouraged by national and local efforts to engage all of the critical stakeholders to foster open, honest, and fact-based dialogue."

But his company, he stressed, is "a local, independent and nonprofit health insurer," subject to "rigorous regulatory oversight" by the state. "We also do not leverage our market share at the expense of our customers and members, especially those who have few, if any, other options for health coverage. We are offended that anyone would suggest otherwise."

And many people who know Rhode Island's health insurance market well disagree with the notion that lack of competition is to blame for high premiums.

Joel H. Cooper, executive vice president of USI New England, a major benefits brokerage with a strong presence in Rhode Island as well as Massachusetts and other states, said the real problem is fast-rising medical costs and the burden of chronic disease.

That said, competition does put insurers on their toes, Cooper said, and makes them work harder to offer higher-quality products.

"In other states where I'm involved where there's more competition," he said, "the carriers one-up each other on some of the value-adds that they bring to the table, whether it's more quality of care with the physicians or the hospitals, or better customer service or claims adjudication. They all have their strengths and specialties."

And local insurers "have to take a hard look" at their administrative costs, Cooper added, "but that won't impact 90 percent of the rate," the part driven by medical costs.

Still, Cooper said, a public plan could be substantially more affordable because the federal government, unlike private carriers, can actually dictate prices to providers, even big ones. The problem is, the government now underpays for many services, he added, so either the new plan has to pay more, reducing the price difference, or it could hurt providers. Either way, private insurers could go out of business, unless they're brought in to administer the public plan, as is done now with Medicaid and Medicare Advantage and Part D plans.

It's a tricky situation, very much worth tackling but full of pitfalls if done wrong, he said.

"This is very volatile," he continued. "It's really going to shake up the market. If this happens, it has to be done very thoughtfully, or it's going to make things worse." •