June 17, 2021

Democrats Push for a Public "Option"


  • President Biden campaigned on implementing a “public option” for health insurance, which would upend private insurance and shift more financial obligations to taxpayers and providers.
  • Democrats have continued their push for a fully government-run health care system.
  • A public option would give the federal government more authority to regulate and administer health care, placing government at the center of personal health care decisions. 

President Joe Biden campaigned on implementing a “public option” for health insurance, which would upend the access to care Americans currently enjoy. When Democrats passed Obamacare in 2010, they were forced to drop the public option from the law because it was too radical for many in their own party. Now that the Democratic Party has taken a hard left turn, the idea is back. Democrats have introduced numerous bills to create a government-run plan, the first step to their goal of a total Washington takeover of Americans’ health care.

Many plans for more federal control 

One of the most consistent advocates for a national takeover of Americans’ health care has been Senator Bernie Sanders. His “Medicare for all” proposal would make all private insurance plans illegal and replace them with one administered by the federal government. Many supporters of the public option are proposing a more gradual shift. They would start by inserting a government-sponsored plan that would “compete” with private plans. Senators Elizabeth Warren and Cory Booker have both admitted, however, that their ultimate goal is to leverage a public option into a complete government takeover of the health care system.

In February, Senators Michael Bennet and Tim Kaine reintroduced their dubiously named Medicare-X Choice Act, which would establish a public option through the Affordable Care Act. Despite branding their public option as Medicare-like, the bill would actually require the plan to adhere to the same requirements as Obamacare but institute price controls for providers, paying them at Medicare fee-for-service rates. The secretary of health and human services would be allowed to increase reimbursement rates for rural providers by 50%. Providers who currently participate in Medicare and Medicaid would be required to take Medicare-X patients. The secretary also would gain the authority to “negotiate” prescription drug prices for Medicare-X plans.

The CHOICE Act, sponsored by Senators Sheldon Whitehouse and Sherrod Brown, would add a new federally run health plan to the Obamacare exchanges. The public option would comply with Obamacare’s insurance and premium requirements. Providers participating in Medicare and Medicaid would be enrolled in the public option automatically, and the HHS secretary would determine whether they can opt out. The secretary would “negotiate” rates with providers, who would be required to accept Medicare rates if unwilling or unable to accept those dictated by the secretary.

Eligibility for the public option depends on the proposal. Senator Bennet’s Medicare-X Choice Act and Senator Whitehouse’s CHOICE Act both offer the public option plan through the ACA marketplace. The Choose Medicare Act, introduced by Senator Jeff Merkley and 12 other Democrats, is perhaps the most brazen government takeover of health care among existing public option proposals. It more closely mirrors President Biden’s campaign plan to undermine the coverage that millions of Americans enjoy by extending the public option to the employer-sponsored insurance market.

Senator Patty Murray and Congressman Frank Pallone, the chairs of the two chambers’ health committees, have issued a request for people to send them ideas on how to design a government-run plan. In April, the Congressional Budget Office issued a report on design scenarios and policy decisions for crafting a public option. As noted by CBO, while each plan proposed is different in design, “the larger the public option’s competitive advantage, the more difficult it would be for private insurers to remain profitable. For example, if the public option was not required to conform with state benefit mandates or rating requirements and if it paid providers Medicare rates and required providers participating in other federal programs to join its network, private insurers would have difficulties retaining sufficient market share while keeping their premiums high enough to justify their participating in the marketplaces.”

At the state level, Washington recently became the first state to implement a public option. The plan originally would have capped provider payments at 100% of Medicare rates, but this was later increased to 160% to increase provider participation. Washington recently passed a new law that will require some providers to accept public option plans. Nevada recently followed suit with legislation to offer a public option in 2026. Health plans participating in the state’s Medicaid program would be required to participate and bid to offer the public option plans on the Obamacare exchange. Providers would be paid, in the aggregate, rates “comparable to or better than reimbursement rates under Medicare.” Any provider participating in Medicaid, the Nevada Public Employees’ Benefits program, or state worker’s compensation program would be required to accept the public option.

different ideas with the same defects 

The goals of the public option are clear: increase government control over the health care system by shifting costs to the taxpayer and reducing payments to doctors, which would, over time, decrease the supply of physicians and lead to waitlists for care.

President Biden has promised that under his plan for a public option, “If you like your employer-based plan, you can keep it. If you have private insurance, you can keep it.” CBO disagreed; if premiums are low, the agency concluded, “some employers would choose to no longer offer health insurance.”

As the public option grows in enrollment, private insurers and employer-sponsored plans would see a corresponding decrease, deteriorating risk pools and increasing premiums, which would have the effect of giving the public option plan an ever-increasing competitive advantage over commercial insurers. Eventually, insurers would be forced to leave the market altogether. The public option would no longer be an “option,” it would be the only game in town. Americans who purposely chose the insurance they now have – and like it – would lose their coverage and be forced to accept what the government gives them.

Federal Government Given Broad Authority To:

Federal Government Given Broad Authority To:

While the various proposals share this ultimate goal, they share a number of additional flaws. Most proposals set provider reimbursement rates based on what Medicare pays, which is substantially lower than private rates and, in many cases, actual costs. Colorado legislators abandoned their public option proposal primarily due to the fact that they could not agree on how to pay providers. The original proposal forced doctors and hospitals to participate in the public option plans, which would have been available to all Colorado residents. While this kind of requirement would help reduce premiums by paying providers less, it is largely impractical because eventually doctors and hospitals would limit the services they provide or be forced to close their doors altogether.

Several of the Democratic proposals would control for the unwillingness of providers to take below-market rates by extorting them into participation. Others require providers to refuse care for the elderly and indigent if they don’t accept the public option by conditioning participation in Medicare and Medicaid on participation in the public option. Over time, these drastically reduced rates could cause doctors unable to pay the costs of providing services to leave the profession and diminish the incentive for new physicians to bear the high cost of medical school and training.

Medicare is already heavily subsidized by taxpayers. While sponsors of the public option claim that it would have limited need for government bailouts, there is no reason to believe them. The co-op plans created by Obamacare – the law’s alternative to a public option – have almost all folded. Furthermore, once the federal government is the sole provider of care, taxpayers will be permanently on the hook for all health care costs – and thus will have an outsize role in health care decisions. With Democrats already pushing for trillions of dollars in new social welfare spending and enormous tax hikes, Americans will simply not be able to pay the steep bills of a national health care system. As a result, the care received by Americans would suffer.

Issue Tag: Health Care