The Congressional Budget Office (CBO) recently shared a guide with reviews and suggestions about designing a federally managed public option health insurance plan. Analysts dove into the details and explored various scenarios and outcomes of such a design. In part, the CBO developed this guide to responding to the growing Congressional sentiments supporting such a public option. Members of Congress are already discussing introduction plan proposals.
While an official public option isn’t a reality, there are interesting elements to such a health insurance offering platform. The CBO analysts outlined eight different choices that policymakers will have when developing such a program. Each of the eight scenarios can play out like a “choose your own ending” book, with various outcomes, setbacks, and improvements to the status quo.
We’ll put a magnifying glass to some of the more intuitive details and highlight the key takeaways of this CBO guide. As a business within the industry, keeping a finger on the pulse of the public option movement will help you stay ahead of the trends and prepare to tap into what such a market platform may bring.
The Eight Primary Design Considerations Discussed in the Guide
The CBO guide bases its findings on eight primary design considerations facing lawmakers regarding a plan for a public offering. Should Congress introduce legislation, it’s these eight points that matter most for developing any public option solution. Diving into the CBO guide, you’ll see scenarios play out based on:
- Funding & Budget Considerations
- Provider Recruitment
- Conformity with State Health Insurance Mandates
- Market-to-Market Benefits & Pricing (Along with Uniformity or Variance Decisions)
- Administration & Tax Considerations
- Accessibility Either In or Out of the ACA Exchanges
- Provider Payment Structures
- Adjustments in Risk Levels for Both Public Option Plans and Others
Any public option program will need to have guidelines and discussions for these eight topics. The final determinations for each will present varying outcomes, according to the CBO analysts.
A Few Core Details Everyone Should Know
With supporting data and outcome explorations, the CBO analysts suggest a public option will likely point to three key distinctions.
- A public benefit option, managed and administered by the federal government, would have the ability to offer the same types of benefits and coverage everywhere. These benefits could also vary with each state, allowing for customization.
- A federally managed public option would more than likely have the greatest impact on uninsured Americans who may not qualify for the ACA premium tax credits.
- Should the public option become available, Medicare providers would also be affected. These providers could either have a choice to participate, or there could be a participation requirement.
The CBO also points out that at the Congressional level, there are important questions that need addressing before a public option platform can blossom.
Where the CBO Analysts Predict Challenges
The analysts suggest the presence of a public option would surely offer its share of competitive advantages. However, these pose additional challenges with such a platform. For example, private insurers might face more demanding markets and narrower profitability opportunities. Citing more specifically, the analysts point out the scenario in which a federal public option is not required to meet state-based benefits requirements, and this public option was to pay Medicare rates to providers. In this situation, private insurance entities would really have a hard time securing any kind of market share.
Effects on Americans Who Need Health Insurance
The CBO guide suggests a public option platform would likely attract a mix of Americans who need health insurance. Those who currently have family or individual coverage, for example, might see increased benefits of such a federally managed plan. Even those with employer-paid health insurance might see reduced costs. But mostly, anyone who earns too much to leverage premium tax subsidies could see benefits and cost savings with a public option plan.
A low-premium option would most benefit those who are ineligible for premium tax credits and subsidies. The analysts suggest because this group pays the entire premium, they will be more responsive to a public option. The recent American Rescue Plan Act of 2021 (ARP) did extend some subsidy eligibilities to this group of Americans through next year, and Congress is under pressure to make those changes permanent. If the ACA subsidy structure reverts to what it was before the ARP, anyone with income higher than 400% of the federal poverty level would find savings.
When it comes to determining budgets, revenues, and federal investment, the public option would more than likely offer better marketplace subsidies. Citing a public option plan with a similar or higher premium than what’s available today might not see a difference. However, a low premium public option plan would probably reduce the benchmark subsidies and premiums, per the CBO analysts.
There would also be an impact on health insurance premiums. Should a public option become available, premiums could either be higher or lower than private or non-participating plans. Deciding on the rules behind risk assessments and the determination of administrative costs could allow for reduced premiums. Other considerations would be in comparing premiums with those of Medicare, as well. This may be attractive at the individual level but increasingly tough on providers.
What this Guide Means for Your Business
This latest CBO review isn’t outlining anything official. The brief doesn’t necessarily provide all the answers. It does, however, mark these essential questions that should be up for discussion as considerations continue. And it does serve as a roadmap for Congressional leaders to discuss. It prompts the essential questions to have answers before the public option can become a viable solution. As a company, operating within the healthcare industry or insurance segments, what happens next can significantly impact your bottom line. These considerations can also help you prepare for new target markets, better data exchange solutions, and pivot to embrace new revenue channels.
As always, if your business needs data solutions now, let the experts at Softheon help. Whether you’re addressing new challenges within your segment today or exploring new avenues for profit in the coming plan years, Softheon can assist in developing your road map, much like the CBO guide does for Congressional leaders. We’ll help you pinpoint the crucial decisions and ask the key questions that lead to success.
Meet the Author
Josh Schultz is a Senior Policy Analyst at Softheon, where he advises the company on health policy issues affecting businesses and government health agencies. Prior to Softheon, Josh worked for a non-profit agency assisting Medicare beneficiaries, a technology company, and consulting firms.