The Public Option: An Idea Whose Time Has (Finally) Come? 

By Jill Zorn 

clock-69184_960_720With competition shrinking and rates rising in many Affordable Care Act (ACA) marketplaces, the idea of a public option is being raised more and more frequently as a possible approach to stabilizing the marketplaces.  A public option is a government-based health insurance plan, similar to Medicare, that could compete in the health insurance marketplaces.

The announcement by Aetna in August that they are withdrawing from most of the exchanges where they currently compete started a new round of public discussion about the need for a public option.

Then, in mid-September, thirty-three U.S Senators, including Connecticut’s Richard Blumenthal and Chris Murphy, signed a Senate resolution calling for all Americans to have the choice of a public option, which would,

…lead to increased competition, reduced premiums, cut wasteful spending on administration, marketing, and executive pay, and ensure consumers have the affordable choices they deserve…and save American taxpayers billions of dollars.

And last week, California’s Insurance Commissioner announced his support for a state-level public option.  While it’s not clear that a state-based public option would have sufficient bargaining power when compared with a federal program, California is a big enough state that it might just be worth considering.

Richard Kirsch, one of the inventors of the public option, reminds us why it is such a popular policy solution.  In his recent blog post in The Hill, “Aetna’s Extortion Boosts Urgency for ObamaCare Public Option”, Kirsch writes,

Offering a national public option…would assure that there is a health insurance plan in every exchange. The plan would be modeled after Medicare, with negotiated rates accepted by almost every hospital and health care provider in the country. Those negotiated rates, like Medicare, will make it more successful at controlling healthcare costs than private insurance.

For all of the increase in expressions of support for a public option, any legislation would certainly face an uphill battle in Congress.  Some Democratic moderates are less keen on the idea than their colleagues who signed the Senate resolution.  And of course, the insurance industry is not thrilled with it either.

By going head-to-head with the powerful insurance lobby, the public option would clearly encounter stiff opposition, just as it did during the fight to pass the ACA.  As Yale University Professor Jacob Hacker, the other “father” of the public option, writes in Vox, “…the most consolidated parts of our private health industry aren’t going to let a strong countervailing power set up shop without a fight.”

But the public option is not going away any time soon.  That’s because, as Hacker writes in his piece entitled, “There’s a Simple Fix for Obamacare’s Current Woes: The Public Option,”

…the public option is one of those policy ideas that hits the trifecta: simultaneously simple, popular, and effective. It’s not the be-all and end-all of reform, but it would make a big positive difference. And its reemergence on the national stage suggests that so long as private plans and providers are consolidating and health insurance networks are contracting — and so long as there are lots of progressives who want to do more to make affordable universal health care a reality — it’s going to be a leading element of the national debate.



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