Revenue Cycle
and Billing

Framing up the Public Option

by | Aug 8, 2016 | Uncategorized

You might be hearing the words ‘Public Option’ thrown around a lot as the 2016 election draws closer.

And it might sound a little like déjà vu.

That’s because a public option–a government-run health insurance company–was one of the signature proposals of the Affordable Care Act in the drafting stages back in 2009. Many Democratic legislators wished to create a public option health insurance company to offer affordable coverage to Americans.

It would have been just what it says–an option. Like sending mail through the Post Office or through UPS, Americans would have the option to buy health insurance from a host of health insurance carriers including the government option.

The provision was scrapped from the final version of the law. Joseph Lieberman threatened to join a Republican filibuster against the law if Democrats kept the provision.

Now Hillary Clinton has reaffirmed her support for a public option as she campaigns to improve upon the legacy of the Affordable Care Act. As it stands, the public option is hardly more than an idea. Details such as the ways and means of the idea have not been explicitly deliberated.

How Would a Public Option Be Possible?

First off, Hillary Clinton does not advocate for a public option at the Federal level. Health Insurance across the country is sold at a local level due to the involved nature of setting up networks.

Shout out to Charles Gaba for bringing to my attention how Hillary’s plan could actually take shape. Per his analysis, he points out that there is a Section 1332 of the Affordable Care Act promoting innovation.

Hillary would work with governors of states to establish health insurance companies. Gaba writes:

“As you may recall…Clinton recognizes that pushing a national public option through is likely next to impossible…but it might be feasible to do so on a state-by-state basis working with state officials using the Section 1332 Waiver starategy…lets say perhaps a dozen or so blue states.”

Beginning in 2017, States can apply for a waiver to:

“pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic provisions of the ACA.”

“State Innovation Waivers allow states to implement innovative ways to provide access to quality health care that is at least as comprehensive and affordable as would be provided absent the waiver, provides coverage to a comparable number of residents of the state as would be provided coverage absent a waiver, and does not increase the federal deficit.”

States have carte blanche to create private health insurance companies; that is, as long as the companies operate within the confines of Section 1332. Hillary could work with governors to make a public option possible.

What Would a Public Option Look Like?

Since the innovation waiver is broad, and if the State-level hypothesis previously mentioned is is true, States would have much discretion in how they would set up a health insurance company in their own states. Some states could create entities in the interest of serving resident members; or, the entities could provide benefits to resident members in ways that transcend health coverage.

Charles Gaba thinks that State Public Option health plans would look a lot like the unsuccessful Obamacare CO-OPs. He writes:

“What would [State Public Options] look like? Well, frankly, they’d probably look a lot like the existing cooperatives which have been falling like dominoes over the past year or so…but with important differences: experience and proper funding support.”

If you think about it, health insurance is an easy concept to grasp. The health insurance company must have enough money to cover all claims in the pool. States have plenty of experience running Managed Care Organizations–the infrastructure is already in place.

All the state would need would be the proper funding to get a health insurance company off the ground.

If a state secures the proper funding, then a State could create a health insurance company that would directly benefit its residents. Given that the enterprise proves profitable, the State could use the profits from the health insurance sales to improve the quality of life in the State.

The North Dakota Mill & Elevator Association is a profitable enterprise owned by the State of North Dakota. Founded in 1922, the company processes wheat, bran and other commodities down into meal, and the company sells its products all over the United States. As the company profits, a good portion of this revenue goes directly to the North Dakota General fund

The influx of cash from this fund ensures that students in the State get low-intrest student loans, farmers gain access to capital to keep their farms thriving, and banks get quick cash in times of financial strain.

What State Would Create the First Public Option?

Minnesota’s legislators are currently deliberating the feasibility of creating a Public Option. The state already offers a Basic Health Plan to residents of the states with low incomes.

These plans offer all the bells and whistles of private health insurance coverage, but the plans are offered separate of Minnesota’s state exchange. This means those who qualify for a BHP buy plans outside of the State exchange, and others who qualify for a QHP buy coverage through the state exchange.

Minnesota is looking to offer its BHP to all residents of the State regardless of income. If the plan won’t alter competition in the State exchanges, then Minnesota will have created the first Public Option.

In addition to public option health insurance companies, Hillary Clinton’s other initiatives include a voluntary Medicare Buy-In at age 55.

Some States might be looking to bypass the future Public Option altogether. Colorado residents will have the option to vote for a State-funded, single-payer health insurance system in November.

Philip Strang works as a health insurance agent at American Exchange. When he’s not discussing health plans, he writes on issues pertaining to the Affordable Care Act.