Proposals to enact a public health insurance option—that is, a government-created plan that competes against private market plans—are gaining traction at the state level and continue to garner support in Congress. These proposals have the potential to drive down health care costs and expand access to coverage by offering consumers a new affordable and comprehensive plan choice. Whether they can achieve these goals, however, depends on several critical design decisions and overcoming strong opposition from well-heeled industry stakeholders.
On May 26, 2021, the chairs of the U.S. Senate Committee on Health, Education, Labor & Pension and the House Committee on Energy & Commerce began a process to broach this challenge, releasing a Request for Information (RFI) seeking input on how to design a federal public option. We reviewed an array of responses and summarize key takeaways below. Strikingly, although several letters from industry groups unequivocally opposed adoption of a public option, the majority of responses CHIR reviewed—including several letters from provider groups and even some insurance industry commenters—offered positive (or, at least, neutral-but-constructive) feedback on how Congress should design a public option. Links to publicly available comments included in our review are included at the bottom of this post.
Eligibility
Commenters largely presumed that the public option would at least be available in the individual market, albeit with some differences in approach. For example, some commenters suggested having eligibility overlap with existing marketplace rules, while others urged Congress to extend eligibility to non-marketplace eligible populations (e.g., undocumented immigrants) or raised the possibility of targeting specific subgroups (e.g., certain income groups, or higher-cost or highly concentrated geographic regions).
More significantly, commenters diverged on whether to extend eligibility to the group market and, if so, how: Should the choice to enroll be given to employees or employers? Should the public option be limited to the small group market or open to large employers or state/local employees? If offered to large employers, should the public option offer only administrative services or a fully insured plan? Notably, behind the competing viewpoints on this issue is the common expectation that opening the public option to employers could result in significantly more savings but also much greater disruption than an individual-market-only approach.
Provider Access and Payment
Even more contentious than employer participation are the interrelated questions of how to ensure adequate access to and pay health care providers. Commenters generally fell into three camps: (1) industry groups largely insisted that any public option should pay providers negotiated rates and not require that they participate in the public option plan; (2) academic experts and other commenters not affiliated with a stakeholder base argued that the public option should pay providers administratively set rates (most likely based off of Medicare, with certain adjustments) and require providers to participate in the public option plan if they participate in other federal programs and/or competing private plan networks; and (3) non-industry stakeholder groups, such as consumer and patient advocacy groups, largely avoided staking out a position, while maintaining that broad provider access was essential.
Some industry groups broke ranks, however. For example, the L.A. Care Health Plan and the Society for General Internal Medicine were amenable to both fixed rates and provider participation requirements, while the American Academy of Family Physicians endorsed setting rates for primary care if the rates were at or above Medicare rates but opposed mandatory participation. The National Rural Health Association—whose membership consists of community hospitals, critical access hospitals, doctors, nurses, and patients—endorsed the approach taken in the Medicare-X Choice Act that relies on Medicare rates but increases payments for rural providers by an additional 50%.
Benefits
Most commenters supported using the current or an enhanced version of the Affordable Care Act’s essential health benefits package for the public option. While many made clear these changes should be made market-wide, others thought the public option could offer more comprehensive coverage than private plans. Adding on services typically provided by Medicaid but not covered by commercial plans (like non-emergency transportation) was a frequent suggestion under either approach. Commenters also widely supported reducing or eliminating cost-sharing, including for high value services and/or lower-income populations.
Premium Assistance
Commenters generally agreed that federal premium tax credits and cost-sharing subsidies should be available for the public option. But some commenters also raised concerns that a lower-cost public option offered through the marketplaces could erode the value of federal premium tax credits, and made suggestions on if and how to address this issue. For example, Families USA suggested disregarding public option premiums in determining tax credit amounts.
Role of States
Few commenters directly addressed what role, if any, states should play in administering a federal public option (those that did were roughly evenly split between being supportive and opposed to state involvement). Most commenters instead focused their responses on either advocating for some limited flexibility for state innovation, along the lines of a Section 1332 waiver program, or discussing the extent to which the public option should compete on a level playing field with state regulated private market plans.
With respect to the latter issue, many commenters wanted the public option to compete on a level playing field with private plans, subject to all applicable state and federal market reform rules. Some further specified that the public option should comply with various state accounting, financial, and solvency rules, be subject to the oversight authority of state regulators, and/or pay the same state taxes as private competitors. Yet some commenters also cautioned that the multi-state plan effort under the Affordable Care Act was challenging because of the complexities of complying with varying state law while also providing a nationally uniform plan. And, in contrast to the level-playing field advocates, the National Rural Health Association argued that the public option should offer national plan with a nationwide risk pool and community rating, to provide a more affordable option for rural communities, which typically have higher risk profiles.
Interactions with Medicare and Medicaid
Commenters addressing the public option’s interactions with Medicare and Medicaid focused on the following three topics: (1) as previously discussed, whether or not rates or provider participation should be tied to either program; (2) generally recommending that the public option should use existing program infrastructure where efficient, such as for conducting eligibility determinations; and/or (3) cautioning that the public option should not undermine the existing benefits or coverage offered by either program.
Broader Health System Reforms
Several commenters expressed support for incorporating payment and delivery reforms into the public option, including through pilot/demonstration programs coming out of the Center for Medicare and Medicaid Innovation. Most commenters also supported promoting high-value care and addressing health care disparities through the public option, including by directing savings generated by the public option to finance efforts to improve health equity.
Opposition and Alternative Recommendations
Opponents’ comments generally fell into one of two categories: (1) reiterating common attacks against the public option, including (disputed) claims that it will increase costs for the federal government and/or tax payers and disrupt the health care and insurance markets through cost-shifting and adverse selection, or (2) briefly stating the group’s opposition to a public option and quickly pivoting to alternative policy recommendations for reforming the private insurance markets, as well as the health care system more broadly.
Interestingly, many of the commenters that fell in the latter group, as well as many of the neutral or positive commenters discussed above, embraced several of the same reforms that could be adopted with or without a public option and are under debate as part of the budget reconciliation package. These include making the American Rescue Plan Act (ARPA)-enhanced ACA subsidies permanent, fixing the family glitch, adopting auto-enrollment policies, enhancing funding for outreach and enrollment in the marketplaces, and filling the Medicaid coverage gap.
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In sum, Congress has a significant challenge before it, but there remains reason to be optimistic that a public option can achieve the goals of reducing costs and expanding access to coverage, among other objectives raised by commenters. Although the final design will not make every stakeholder happy, there is room to build consensus on many key issues and push forward.
A Note on Our Methodology
This blog is intended to provide a high-level summary of comments available to our team. This is not intended to be a comprehensive report of every element of every response letter submitted to the committees.