The public health insurance option, also known as the public insurance option or the public option, is a proposal to create a government-run health insurance agency that would compete with other private health insurance companies within the United States. The public option is not the same as publicly funded health care, but was proposed as an alternative health insurance plan offered by the government. The public option was initially proposed for the Patient Protection and Affordable Care Act, but was removed after the independent US senator for Connecticut Joe Lieberman threatened a filibuster.Lieberman: I'll block vote on Reid plan, By Manu Raju, Politico.com, 10/27/09
As a result, Congress did not include the public option in the bill passed under reconciliation. The public option was later supported by Hillary Clinton and the Democratic Party in the 2016 and 2020 elections and multiple other Democratic candidates, including the later President Joe Biden. However, Biden made no attempt to implement a public option in his four years as President.
History Federal The public option was featured in three bills considered by the United States House of Representatives in 2009: the proposed Affordable Health Care for America Act (), which was passed by the House in 2009, its predecessor, the proposed America's Affordable Health Choices Act (), and a third bill, the Public Option Act, also referred to as the Medicare You Can Buy Into Act, (). In the first two bills, the public option took the form of a Qualified Health Benefit Plan competing with similar private insurance plans in an internet-based exchange or marketplace, enabling citizens and small businesses to purchase health insurance meeting a minimum federal standard. The Public Option Act, in contrast, would have allowed all citizens and permanent residents to buy into a public option by participating in the public Medicare program. Individuals covered by other employer plans or by state insurance plans such as Medicare would not have been eligible to obtain coverage from the exchange. The federal government's health insurance plan would have been financed entirely by premiums without subsidy from the federal government,Why We Need a Public Health-Care Plan Robert Reich The Wall Street Journal although some plans called for government seed money to get the programs started.e.g. House Bill H.R.3962 Section 322 (b)2(B) "AMORTIZATION OF START-UP FUNDING- The Secretary shall provide for the repayment of the startup funding provided under subparagraph (A) to the Treasury in an amortized manner over the 10-year period beginning with Y1". The Senate HLP Committee bill contains a similar clause in § 3106 "A Health Benefit Plan Start-up Fund will be created to provide loans for initial operations, which the plan will be required to pay back no later than 10 years after the payment is made."
President Barack Obama promoted the idea of the public option while running for election in 2008. Following his election, Obama downplayed the need for a public health insurance option, including calling it a "sliver" of health care reform, but still campaigned for the option up until the health care reform was passed.Obama, Congress easing debate on public option - Beaver County Times
Ultimately, the public option was removed from the final bill. While the United States House of Representatives passed a public option in their version of the bill, the public option was voted down in the Senate Finance CommitteeCNN: Senate panel votes down public option for health care bill . September 29, 2009. and the public option was never included in the final Senate bill, instead opting for state-directed health insurance exchanges.Bankrate: Key details of health reform bills. Critics of the removal of the public option accused President Obama of making an agreement to drop the public option from the final plan,David D. Kirkpatrick, August 12, 2009, "Obama is taking an active role in talks on health care plan", New York Times but the record showed that the agreement was based on vote counts rather than backroom deals, as substantiated by the final vote in the Senate.Washington Post: "Obama never secretly killed the public option. It's a myth". November 17, 2011.
In January 2013, Representative Jan Schakowsky and 44 other Democratic representatives introduced , the Public Option Deficit Reduction Act, which would amend the Affordable Care Act to create a public option. The bill would set up a government-run health insurance plan with premiums 5% to 7% percent lower than private insurance. The Congressional Budget Office estimated it would reduce the United States public debt by $104 billion over 10 years."House Dems push again for creation of government-run health insurance option" The Hill, January 16, 2013 Representative Schakowsky reintroduced the bill as in January 2015, where it gained 35 cosponsors."Cosponsors: H.R.265 — 114th Congress (2015-2016)" Congress.gov, August 5, 2016
In the run-up to the 2016 Democratic National Convention, the Democratic Platform Committee approved a plank supporting the addition of a public option onto the Affordable Care Act.Alex Seitz-Wald, Democrats Advance Most Progressive Platform in Party History , NBC News (July 10, 2016). The decision was seen as a compromise measure between the Hillary Clinton campaign who during the 2016 presidential primaries advocated for keeping and reforming the ACA, and the Bernie Sanders campaign who advocated for repealing and replacing the ACA with a single-payer Medicare for All program. The Clinton campaign stated shortly before the plank was added that as president Clinton would "pursue efforts to give Americans in every state in the country the choice of a public-option insurance plan", while Bernie Sanders applauded the decision to "see that all Americans have the right to choose a public option in their health care exchange, which will lower the cost of healthcare".Hillary Clinton: The Briefing: Hillary Clinton's Commitment: Universal, Quality, Affordable Health Care for Everyone in America . July 9, 2016.Truth Out: "Sanders Cites Democratic Platform, Public Option as Basis for Endorsing Clinton" . July 13, 2016. The call was echoed by President Obama, who in an article for the American Medical Association stated that Congress "should revisit a public plan to compete alongside private insurers in areas of the country where competition is limited."NPR: Obama Renews Call For A 'Public Option' In Federal Health Law. July 11, 2016.
In the lead-up to the 2020 presidential election, the public option, "once considered too far-reaching", had become "seen as a more moderate alternative" to proposals like Bernie Sanders' Medicare for All plan. A majority of candidates running in the Democratic primary, including Joe Biden and Pete Buttigieg, preferred a healthcare plan that included a public option over a single payer plan, and some candidates who preferred a single payer plan said they would also accept a public option as a compromise or step along the way to single payer, such as Elizabeth Warren, who initially said "there's no excuse for stopping at half-measures" regarding single payer, but would later pivot to supporting the enactment of a public option first before transitioning to a single payer system.
State legislation Attempts to implement a public option have also been made at the state level. In May 2019, a law was passed and signed in Washington for the establishment of a public option, which is the first law for a public option to be passed at the state level, and is intended make a public option plan for purchase in 2021. The Cascade Select program which requires private insurance companies to provide alternative plans, known as Cascade Select plans, which are overseen, but not run, by the state; the alternative plans are sold on the ACA marketplace alongside ACA-compliant private insurance plans. The law caps provider payments on Cascade Select plans at 160% of Medicare payment rates. The Washington state law has been variably described as both a "public option" and a "public-private partnership". Similar legislation was passed in 2021 in both Colorado and Nevada.
New Mexico has also passed legislation establishing official studies into a state-level public option and has pursued further action, while Delaware, Oregon, and Massachusetts have completed similar studies looking into state-level public options but have taken no additional action, and other state legislatures have considered either outright enacting a public option or at least passing legislation to establish an official study on a potential public option plan.
Rationale
The purpose behind the public option is to make more affordable health insurance for uninsured citizens who are either unable to afford the premiums of private health insurers or are rejected by private health insurers due to pre-existing condition. Supporters have also argued (and proposed possible ways) that a government insurance company (public option) could put pressure on private health insurance companies to lower their premium costs and accept more reasonable profit margins, while also encouraging them to create more competitive plans with wider coverage, as well as eventually creating a more competitive, reasonably priced healthcare market across the industry by encouraging more efficient treatments and practices, and finally, eventually generating a large source of non-tax revenue for the government, which could help ease the rate of increasing budgetary deficit. Proponents have proposed this would be accomplished by initially paying doctors and hospitals 4%-5% higher for claims than the average paid by private insurers but charging lower premiums than them, thus creating a more widely accepted, competitive product- making it the obvious choice and forcing private health insurers to create their own, similar reasonably priced, more full-featured insurance plans.
A public option would be able to offer such competitive options, as they would not be operating as a traditional for-profit business, whereby the main priority is maximization of profits, as is the case of private health insurers- but instead operate much like a non-profit organization, whereby all funds acquired through premiums, minus operating expenses, could be paid out on claims (directly benefiting the policy holder, rather than a disproportionate amount of revenue generated from premiums paid to the insurer by the policy holder serving typical corporate uses, such as multimillion-dollar executive salaries and bonuses,Salary.com (Accessed: May 2, 2020): "Aetna Inc. Executive Salaries (Data for years 2006-2017)", Aetna. stock dividends,Street Insider (Accessed: May 2, 2020): "Quarterly Dividend History for Aetna Inc. Q4 2011-Q4 2018", Dividend Aetna Inc. and excess cash flows).