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,1 the vast majority of whom receive federal subsidies to reduce premiums and, in some cases, other out-of-pocket costs.2 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.
The debate around the public option and related policies dates back to the early 20th century, when an earlier generation of progressive reformers sought to advance a compulsory national health insurance program. While the effort was ultimately thwarted by labor leaders concerned about the ability of government to successfully negotiate adequate health benefits for workers,3 similar proposals have since periodically resurfaced, notably during the debate over the ACA in 2009 and 2010. In each instance, the public option plan failed to secure the approval of Congress.
1 KFF. Key facts about the uninsured population. https://www.kff.org/uninsured/fact-sheet/key-facts-about-theuninsured-population/. Published December 7, 2018.
2 KFF. Marketplace effectuated enrollment and financial assistance. https://www.kff.org/other/state-indicator/effectuated-marketplace-enrollment-and-financialassistance. Published August 14, 2019. Accessed November 13, 2019.
3 Hoffman B. Health care reform and social movements in the United States. Am J Public Health. 2003;93(1):75–85.doi:10.2105/ajph.93.1.75