September 5, 2023 | Updates

ICYMI: The Public Option is Not the Path Forward 

WASHINGTON, D.C. – As policymakers reconvene after the summer, recent data and research provides further proof that creating an all new, government run health insurance plan, like the public option, is costly and not the path forward.    

Data in the News  

  • Driving down the uninsured and increasing access: “The U.S. Department of Health and Human Services (HHS) released a new report showing that the national uninsured rate reached an all-time low of 7.7 percent in early 2023.” (Department of Health and Human Services, 08/03/23
  • Americans are satisfied with their coverage: “A majority of Americans are satisfied with the nation’s current health insurance system, and say they’d be less inclined to vote for any lawmaker who wants to replace it with a new, government-run health insurance system, according to a new poll.” (The Well News, 06/20/23

Recent Research on the Public Option 

The Partnership’s latest study shows that implementing a national public option could add over a trillion dollars to the national deficit. Key findings by Lanhee Chen, Tom Church, and Daniel L. Heil show that: 

  • Higher inflation and changes to federal reimbursement rates to health care providers suggest an even larger price tag for the public option than previously estimated, increasing deficits by $1.2 trillion in its first ten years. (Lanhee Chen, Tom Church, and Daniel L. Heil, 08/02/23
    • Financing the public option would require dramatic increases in: 
    • the corporate tax rate by 33.4 percent 
    • income taxes for middle-income families by $3,400 
    • the Medicaid HI payroll tax 
  • By 2053, spending on the public option would account for 3 percent of GDP and be larger than Medicaid. Current projections put long-term federal debt at 195 percent of GDP; the public option would push it even further to 228 percent.  

A new study shows that creating a public option would impact those who want to keep the coverage they have now. Key findings from the report authored by experts at FTI Consulting show that: 

  • By setting reimbursement rates below market value and cutting payments to providers, a public option would ultimately destabilize the market for private insurance, hinder access to providers, and threaten consumer choice as private insurers gradually leave the individual market entirely. (FTI Consulting, 6/21/23) 
  • By 2034, 20 percent of states could have no private plans available for their exchange populations to choose from following the introduction of a public option. By 2050, this figure would rise to half of all states with no private plans available. (FTI Consulting, 6/21/23
  • Providers could suffer financial losses of nearly $11 billion (in today’s dollars) as a result of fewer than two million people, or 13 percent of all enrollees, enrolled in private plans by 2050, threatening access to care for patients.  
  • As insurers gradually exit the marketplaces, nearly 300,000 Americans enrolled in ACA coverage would be removed from their existing health plan in the first year following the introduction of a public option.  
  • Over time, many individual market enrollees will be left to choose between just one remaining private insurance plan in their state and a public option. Meanwhile, providers facing lower payment rates under a public option may choose to favor patients enrolled in private plans to maintain financial stability. This could create a “two-tier” health system whereby enrollees in public and private insurance have access to different sets of health care providers and services.  



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