STUDY: ASSESSING THE IMPACT OF A PUBLIC OPTION ON MARKET STABILITY AND CONSUMER CHOICE
The health insurance marketplaces, established under the Affordable Care Act (ACA), rely upon a system of managed competition to ensure access, affordability and consumer choice in the individual and small group markets. This approach has effectively expanded coverage to millions of
Americans, the vast majority of whom receive federal subsidies to reduce premiums and, in some cases, other out-of-pocket costs. Health care
affordability remains a concern for many Americans, however, and proponents of a “public option” argue that offering a government-run health plan in the marketplaces will improve affordability and access by promoting competition and choice. FTI Consulting sought to test this theory by modeling a public option and assessing its impact on market stability and consumer choice in the ACA marketplaces. The results suggest that – rather than spurring competition – the introduction of a public option would threaten the long-term viability of existing ACA plans, with half of current enrollees moving to the government plan by 2030. In fact, the large
discrepancy in premiums under the public option scenario would eventually cause the elimination of all private plans in the individual market.