CBO sketches out public option health plan possibilities

The Congressional Budget Office has come out with a guide to designing a federally administered “public option” health insurance plan.

CBO analysts developed the guide in response to efforts by some members of Congress to introduce federal public option plan proposals.

The analysts discuss eight choices policymakers can make when designing a public option program, and how those choices might affect the nature of the health insurance market.

Related: States ready to take on health insurers in fight for a public option

“The larger the public option’s competitive advantages, the more difficult it would be for private insurers to remain profitable,” the CBO analysts write.

“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.”

Eight choices

There are the eight major design considerations discussed in the CBO report:

1. Funding.
2. Conformity with state health insurance regulations.
3. Market-to-market uniformity, or lack of uniformity, in benefits and prices.
4. Provider recruitment.
5. Provider payment rates.
6. Coverage richness levels, and access inside or outside of the Affordable Care Act public health insurance exchange programs.
7. Administration and taxes.
8. Adjustments for any differences in risk levels between public option plans and other types of plans.

The CBO analysts note that a higher-priced public option plan would likely have a smaller effect on federal health care spending and revenue than a lower-cost plan.

A plan could attract a mix of uninsured people, people who now have individual or family coverage and people with employer-sponsored health benefits, the analysts write.

A public option plan would probably have the biggest effect on uninsured people who earn too much to get much help from the Affordable Care Act premium tax credit subsidy, the analysts say.

Read more: 

• Public option and capped-rate policies considered as opportunities to improve ACA
• Report: Public option could reduce premiums by up to 27%
• What to expect from the Biden administration on the regulatory front