The new state level public option plans attempt to decrease health care costs by paying lower rates to hospitals, doctors and other medical providers than private insurance companies do. “The unifying theme among the three states is essentially using the power of the state government to try to lower premiums for insurance consumers,” says Sabrina Corlette, co-director of the Georgetown University McCourt School of Public Policy’s Center on Health Insurance Reforms.
With prospects dim for the U.S. to adopt a single-payer "Medicare for All" program, health care reform advocates turned instead to an insurance plan designed by the government that could compete with private insurance plans sold on the health care exchanges. The idea behind this "public option" is that it could ultimately expand health care access by making a lower-cost plan available to consumers.
Although a public option stands a better chance of passing in Congress than Medicare for All, it won’t be free of controversy. As in Washington and Colorado, what would be politically acceptable is unlikely to deliver the market transformation that some advocates predict.
We’re about to learn a lot about how a public health insurance option actually works in the US.
A public option would increase premiums for those with major illnesses. Private insurers would siphon away healthier persons from the general insurance pool by offering inexpensive but noncomprehensive plans, plans designed to appeal to those with few medical needs.
The United States has serious health care problems: More than 27 million uninsured people, costs that are growing faster than income, and a staggering $37 trillion of unfunded liabilities in the Medicare program.
Perhaps most alarming: The US ranks lowest among developed nations in avoiding preventable deaths, despite its world-class resources and medical technology.
The idea is that the government might be able to offer a more affordable option for people, which could push down prices in the private insurance world.
The public option would further stratify America’s health-care system—as it has done in other countries, where only the lower and middle classes suffer the full brunt of inferior single-payer care.
An advantage of a public option, at least politically, is it would preserve more choice for individuals, who could stick with a private plan if they prefer. That would make it less disruptive than a single-payer plan. A downside is that keeping lots of different insurance options could undermine one of the goals of a single-payer system, a simpler approach that would involve less money tied up in paperwork and insurance company profits.
Beyond fiscal considerations, the public option would quickly displace employer-based and other private insurance. This would force some private insurers to exit the market and encourage greater consolidation among remaining insurers. Consumers seeking coverage would be left with fewer insurance options and higher premiums.
Although opposed by some firms in the health care industry, a public option would bring down families' health care costs and improve the quality of coverage—even for people who remain in private insurance.
A public health insurance option, often called a “public option” is an emerging solution that would create a high quality, dependable, more affordable option for health insurance.