Surrounded by millions of uninsured residents and those struggling to keep up with rising costs, New York Sen. Charles E. Schumer is pushing a public health insurance option to compete with private insurers.

Charles E. Schumer

Schumer, a Democrat, said New York alone contributes 2.7 million to the nation’s estimated 45.5 million pool of those without health insurance while another million are spending more than a quarter of their pre-tax income on health care. Therefore, he said in a statement, the time has come for “high quality and lower cost health care” through the government.

“The bottom line is that we need to rework our health care system to lower out-of-control costs and to insure more Americans,” the senator said in a statement. “Our current system, dominated by private insurance companies, simply has not done the job. That is why providing a robust public plan option as a choice for health care consumers is an essential part of the solution.”

Schumer added that the goal is to provide consumers with choices and introduce more competition. He noted that the public plan wouldn’t have any government-aided advantage over private insurers, “but would be able to offer lower premiums because it is an organization that is not focused on turning a profit.” He added that this would also “exert downward pressure on the premiums of existing insurance plans.”

“With more choices comes more competition, and with more competition comes lower prices,” he said. “This will provide relief to families across the country – no matter what their insurance – coping with high premiums, small businesses who are struggling to pay for health insurance for their employees, and for the freelance worker that finds insurance too expensive to purchase on his own.”

Schumer’s proposal, similar to those proposed by President Barack Obama during his campaign and a plan by Senate Finance Committee Chairman Max Baucus (D-Mont.) last year, establishes a not-for-profit insurance company established by the federal government. The public plan would compete on a level playing field, he said, with existing private health insurance plans in “exchanges,” where affordable health insurance is offered to individuals and small businesses.

The exchange, called the “connector” in Massachusetts’ universal health plan, would be a virtual marketplace, Schumer said, and proposed to be state based, tailoring the needs of each state’s residents.

Schumer said in addition to adding competition to drive down insurance costs, he hopes his public plan would also bring transparency to the health insurance market, serve as an entity that can pioneer innovative practices and provide a stable “always there” option to those in the U.S. who are uninsured and under-insured.