Public health insurance option facts for kids

The public health insurance option, often called the public option, is a plan to create a health insurance company run by the government. This government company would compete with other private health insurance companies in the United States. The public option is different from publicly funded health care, which is when the government pays for everyone's healthcare. Instead, it was suggested as another health insurance choice offered by the government.

This idea was first proposed for a law called the Patient Protection and Affordable Care Act (ACA). However, it was removed from the final law after Senator Joe Lieberman from Connecticut threatened to stop the bill from passing. Later, the public option was supported by Hillary Clinton and the Democratic Party in the 2016 and 2020 elections. Many other Democratic candidates, including current President Joe Biden, also supported it.

History of the Public Option Idea

Early Federal Proposals for a Public Option

The idea of a public option appeared in three bills considered by the United States House of Representatives in 2009. These included the proposed Affordable Health Care for America Act and the America's Affordable Health Choices Act. In these bills, the public option would have been a special health plan. It would compete with similar private insurance plans on an online marketplace. This marketplace would help people and small businesses buy health insurance that met a basic federal standard.

Another bill, the Public Option Act, would have allowed all citizens and permanent residents to join the public Medicare program. Medicare is a government health program mainly for older Americans. These public option plans would have been paid for by the people buying the insurance, not by government taxes. Some plans did suggest initial government funding to help them start.

President Barack Obama supported the public option when he ran for president in 2008. After he was elected, he sometimes described it as a small part of healthcare reform. However, he continued to support the idea until the healthcare reform law was passed.

Why the Public Option Was Not Included in the ACA

The public option was eventually removed from the final healthcare law. The House of Representatives had included it in their version of the bill. But the idea was voted down in the Senate Finance Committee. It was never part of the final Senate bill. Instead, the Senate chose to create state-run health insurance exchanges.

Some people criticized President Obama, saying he agreed to drop the public option. However, records showed that the decision was based on how many votes the idea would get in the Senate, not on secret deals.

Later Efforts to Bring Back the Public Option

In January 2013, Representative Jan Schakowsky and other Democratic representatives introduced a new bill. This bill, called the Public Option Deficit Reduction Act, aimed to add a public option to the Affordable Care Act. This government-run plan would have premiums (monthly payments) that were 5% to 7% lower than private insurance. The Congressional Budget Office estimated it could reduce the United States public debt by $104 billion over 10 years. Representative Schakowsky reintroduced the bill in 2015.

Before the 2016 Democratic National Convention, the Democratic Party decided to support adding a public option to the Affordable Care Act. This was a compromise between Hillary Clinton's campaign, which wanted to improve the ACA, and Bernie Sanders' campaign, which wanted a "Medicare for All" system. Both Clinton and Sanders supported the decision. President Obama also wrote an article saying Congress should "revisit a public plan to compete alongside private insurers."

Leading up to the 2020 presidential election, the public option became a more popular idea. Many candidates in the Democratic primary, including Joe Biden and Pete Buttigieg, preferred a healthcare plan with a public option. Some candidates who wanted a single-payer system, like Elizabeth Warren, also said they would accept a public option as a first step.

State-Level Public Option Efforts

Some states have also tried to create their own public option plans. In May 2019, Washington state passed a law to create a public option. This was the first state to do so. The program, called Cascade Select, requires private insurance companies to offer special plans. These plans are overseen by the state but not run by it. They are sold on the ACA marketplace alongside other private plans. The law limits how much doctors and hospitals can be paid for services under these plans.

Similar laws were passed in Colorado and Nevada in 2021. New Mexico has also studied a state-level public option. Other states like Delaware, Oregon, and Massachusetts have looked into it but have not taken further action yet.

Why People Support the Public Option

The main goal of the public option is to make health insurance more affordable. It aims to help people who cannot afford private insurance or who are turned down because of existing health conditions.

Supporters believe a government insurance company could pressure private companies to lower their prices. This could also encourage private companies to offer better plans with wider coverage. Over time, this could lead to a more competitive and fairly priced healthcare market. It could also create a new source of income for the government.

A public option could offer lower prices because it would not focus on making a profit. Unlike private companies, which aim to maximize profits, a public option would work more like a non-profit organization. Most of the money collected from premiums would go towards paying for medical claims. This is different from private companies, where a lot of money might go to executive salaries or shareholder dividends.

Supporters also think a public option could encourage hospitals and medical groups to work more efficiently. They believe it could lead to doctors and specialists being paid salaries instead of per procedure. This could simplify billing and lower overall healthcare costs.

Competition and Market Fairness

Many supporters, like columnist E. J. Dionne, argue that in many parts of the United States, one or a few companies control the health insurance market. This is called a monopoly or an oligopoly. Economist Paul Krugman also pointed out that local insurance monopolies exist in smaller states. He said that traditional ideas of fair market competition do not apply to the insurance industry. He argued that insurance companies often compete by trying to avoid covering people who need care the most.

Economist Robert Reich believes that only a "big, national, public option" can force insurance companies to cooperate and lower costs. He has accused insurance and drug companies of fighting against the public option.

Many Democratic politicians have publicly supported the public option. President Obama continued to campaign for it. In 2009, he said that a public option would "help improve quality and bring down costs." He also stated that a public option would need to be "self-sufficient" and succeed by reducing its own costs, not by making profits.

Other Healthcare Ideas

The Affordable Care Act and Its Exchanges

The final law, the Patient Protection and Affordable Care Act (ACA), created health insurance exchanges in each state. These exchanges opened in October 2013. The ACA requires most Americans to have health insurance. The government offers financial help to people with lower incomes to help them afford insurance.

Health Insurance Cooperatives

One alternative idea was to support private, non-profit health insurance cooperatives. The goal was for these co-ops to grow large enough to offer cost savings. However, some politicians, like Howard Dean, were concerned that these co-ops would struggle to compete with existing private insurers. Paul Krugman also doubted their ability to compete effectively.

Single-Payer Healthcare System

Another idea, though politically difficult, is a single-payer system. In this system, the government would pay for most healthcare services. A bill called the Medicare for All Act has been proposed many times since 2003. President Obama opposed a single-payer system for the ACA, saying it made more sense to improve the existing system rather than build a completely new one.

Different Public Option Approaches in the Senate

Several different ways to introduce a public option were suggested in the Senate:

• Senator Olympia Snowe proposed a "trigger" system. A public plan would only be put in place in states that did not have enough private insurance companies.
• Senator Tom Carper suggested an "opt-in" system. In this plan, state governments would choose if they wanted to offer a public plan.
• Senator Chuck Schumer proposed an "opt-out" system. States would automatically be part of the public option network but could choose to leave it.

See also

• Multi-payer healthcare
• Health care compared
• Health care reform in the United States
• Publicly funded health care
• SustiNet