The single-payer health plans proposed by Senators Bernie Sanders and Elizabeth Warren are often assailed as being too disruptive. A government plan for everyone, the argument goes, would mean tens of millions of Americans would have to forgo the health insurance they love.
Democratic presidential candidates with more moderate brands have their own proposition: a “public option” that would preserve the current private insurance market, while giving people the flexibility to choose government insurance.
Joe Biden, the candidate and former vice president, went so far as to say that “if you like your private insurance, you can keep it”, as part of his public option proposal. Pete Buttigieg, mayor of South Bend, Indiana, has also adopted such a plan, which he calls “Medicare for anyone who wants it.” Its implication is that, if you don’t want it, there will be other choices.
A public option would be less disruptive than a plan that instantly eliminated private insurance. But an inexpensive and attractive public option could upset the private market and also wind up some existing insurance arrangements. Conversely, a public option that is expensive and unattractive might not do much at all.
“The political appeal of the public option is that it preserves the choice of private insurance,” said Larry Levitt, vice president of the Kaiser Family Foundation. “But the better it works, the less likely it is to actually preserve a private insurance market.”
Most Democratic presidential candidates are in favor of public option plans, not just Mr. Biden and Mr. Buttigieg. Ms Warren also recently released one – as part of her “transition plan” to a single payer. (Mr Sanders has long had a public option in his Medicare for All Act, to extend coverage for the four years before a single-payer system goes into effect.) Opinion polls show that public option plans enjoy higher support than single-payer plans, even among Democrats.
The basic idea behind a public option is that it would have certain advantages over private insurance. But most public option plans are a bit vague about their strength. The government is able to pay doctors and hospitals lower prices for Medicare patients than most private insurance because it sets the prices and covers so many people.
A public option, on the other hand, would cover a smaller population initially and might have to negotiate with hospitals for good deals, just like other insurance companies do. Under these circumstances, several economists said, the public option could look a lot like existing insurance: quite expensive and covering a limited number of doctors and hospitals.
“What would happen?” said Sherry Glied, dean of the Wagner Graduate School of Public Service at New York University and a former health officer in the Obama administration. “Almost nothing.” Ms Glied said the public nature of the scheme alone would do little to distinguish it from private offerings.
If the public option became explicitly linked to Medicare – requiring all providers who wanted Medicare patients to also accept public option patients – the public option might be able to negotiate low prices for care and to include a wide range of doctors and hospitals. In most markets across the country, this could make it much more attractive than the choices currently available to people buying their own insurance.
Insurers should adapt. Either they should lower the prices as well, or they should offer some kind of special service. Otherwise, they would lose a lot of customers.
“It would push them to demonstrate the value of what they are selling,” said Linda Blumberg, member of the Urban Institute. His research estimated the effects of several public option plans and found that the plans would tend to modify the remaining private insurance.
It’s also possible that tying public option coverage to Medicare could cause some doctors to stop accepting Medicare patients, Ms. Glied said. It would be another form of politically risky disruption.
The plans of the main presidential candidates would also change the rules for employer health plans, allowing workers to leave their work coverage to buy the public option. This change could have effects on employer insurance. Some workers, particularly those whose low incomes would qualify them for financial assistance to purchase a public plan, may change jobs. Ms Blumberg said individuals’ transition out of private plans would likely be slower there, as employer insurance tends to be “sticky.” But the existence of a public option could also encourage some employers to abandon private coverage altogether.
A public option regime would not directly affect private insurers. But by changing the rules of the market, it could influence a company’s business decisions. And it could affect consumers who want to buy private coverage.
Under Obamacare, new health plans had to follow a set of rules, while many old ones were allowed to follow the old rules. Many insurance companies canceled the old plans anyway, sparking a series of complaints about how the law had caused people to lose the coverage they loved. President Obama had promised Americans that they could keep their current coverage under the Affordable Care Act, a wish that became Politifact’s Lie of the Year in 2013.
A very competitive public option could have a similar effect: if it took a lot of market share from private insurers, some might decide to stop selling certain lines of cover. Private insurance could disappear from some places, or exist largely to fill certain niches, such as high deductible plans.
The health care industry tends to dislike public option plans for this reason. A competitive public option would likely take business away from private insurers. And that would almost guarantee that doctors and hospitals would be paid less for their work. The effects could be smaller than under “Medicare for all”, but they would point in the same direction.
Many candidates have been vague about key details, such as whether the public option plan would pay health care providers Medicare prices or some other price. They also did not say whether the government itself would offer the public option or whether it would allow private carriers to operate it.
This year alone, Washington state implemented a public option but, under pressure from doctors, hospitals and insurers, set rates well above what Medicare pays and initiated a plan. private to manage it. A national public option plan like this would likely be less disruptive than a plan that looks more like Medicare, but it would also be less popular.