The Public Option Plan is Popular, but State Efforts to Enact it Face Challenges

By Sabrina Corlette, Rachel Schwab, Justin Giovannelli and Emily Curran

The January 2020 Kaiser Family Foundation tracking poll finds that 68 percent of Americans would support a government-run “public option” plan to compete with private health plans. This type of support prompted a wave of activity during the 2019 state legislative sessions, when at least 10 states debated adoption of a public option-type plan to improve coverage affordability and reduce the numbers of uninsured. Our new report, States Seek to Improve Affordability, Expand Coverage Through Public Option and Medicaid Buy-in Proposals, documents this activity and assesses the opportunities and challenges for states to enact a public option plan.

Only one state – Washington – ultimately enacted a public option bill during the 2019 state legislative session. Five other states – Colorado, Maryland, Nevada, New Mexico, and Oregon – tasked agency officials or independent commissions to study and/or develop a Medicaid buy-in or public option program. These states share common goals, such as improving the affordability of insurance, reducing the uninsured, and offering consumers more plan choices. The states also share similar political and practical challenges to enacting and implementing a public option or buy-in proposal. These include stakeholder concerns and fiscal constraints, and considerations regarding the downstream impact on the Affordable Care Act marketplaces and employer-sponsored insurance.

Medicaid Buy-in: Individuals with incomes too high to qualify for Medicaid under current eligibility rules would be allowed “buy in” to the Medicaid program, with or without state-funded subsidies.

Public Option: A state-backed health plan that would compete with private health plans. The amount of state backing can vary. Under some proposals, the state would take on a significant portion of the administration and risk of running a health plan. In others, such as in Washington, the operation and risk of running the plan is delegated to private insurers, but the state dictates certain elements, such as provider reimbursement and/or benefit design.

To assess states’ experiences and document the policy considerations for adopting public option plans at the state level, we analyzed relevant legislation and published analyses of the proposals, and conducted structured interviews with state officials, legislators, and advocates in nine states. Read our full report here.

The authors thank the Commonwealth Fund for their support of this research.

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