Will the Public Option Provide Universal Access to Affordable Health Insurance?

November 3, 2020 by Aburiyeba Amaso

by Ezra Tanen

A decade after the passage of the Affordable Care Act, Americans still struggle to afford adequate health insurance coverage. The average family of four pays $28,000 annually in health insurance premiums,[1] and medical bills make up half of all unpaid debts sent to collection agencies.[2] Additionally, 30 million Americans have no health insurance, and the uninsured are disproportionately people of color.[3] Black Americans are 1.5 times as likely as White Americans to be uninsured and Hispanic Americans are 2.5 times as likely.[4]

Some politicians, for example Senators Bernie Sanders and Elizabeth Warren, advocate for Medicare for All, a plan that would guarantee universal access to affordable health insurance coverage.[5] Their plans are single-payer, meaning they fund health insurance through progressive taxation, eliminate premiums, and ensure that health insurance costs no more than anyone could afford in taxes.[6] Critics warn that Medicare for All will increase the federal deficit by as much as $3.4 Trillion a year.[7] Furthermore, only 41% of Americans support a single-payer system, including a paltry 14% of Republicans.[8] Constituents who fear losing private coverage may join forces with powerful health insurance companies to kill the measure before it passes Congress.[9]

Throughout the Democratic Presidential Primary and the General Election, other candidates, and especially former Vice President Joe Biden, have focused on introducing a public health care option to remove barriers to insurance coverage.[10] Politicians who support the public health insurance option pitch it as a more politically feasible alternative to Medicare for All that is less costly to the Treasury.[11] This post first explains the public health insurance option and then argues that the plan is likely less costly to taxpayers and more politically viable than Medicare for All. However, the public option is unlikely to provide universal health insurance coverage and saves money for the government by failing to save costs for those who purchase public option insurance. Despite these shortcomings, enacting a public insurance would positively impact some populations, especially those who live with chronic diseases and in markets with few health insurance options.

The public health insurance option is best explained in contrast to single-payer health care. Like single-payer health care, the public option is administered by a government entity, which collects premiums from enrollees and makes payments to medical service providers.[12] Unlike single payer, the public option is chiefly funded by users who choose to enroll in the public health insurance plan and may pay premiums and out of pocket costs.[13] Furthermore,  while single-payer would effectively replace private health insurance, the public option is an alternative that would compete with private insurance.[14]

Many studies project that the public option will cost the federal government less than Medicare for All. The most skeptical private study estimates that the public option would cost the government $51.5 billion a year,[15] which is still far less than the $63 billion a year which Medicare for All could cost according to the most favorable estimates.[16] Meanwhile, the Congressional Budget Office (CBO) released estimates showing that a public option could reduce federal deficits by $53 billion to $158 billion over 10 years.[17]

The public option enjoys much broader and more bi-partisan public appeal than single-payer health care and could be more politically viable. Currently, 70% of Americans support a public option health care plan, including 46% of Republicans.[18] Support across the political spectrum is noteworthy when considering that Republican support for any national health insurance plan dropped from 72% in 2006 to 40% in 2019.[19] Such broad appeal may convince reluctant politicians to support bills that establish the public option.

However, unlike Medicare for All, the public option will not achieve universal coverage. On a theoretical level, some argue that an opt-in public option will provide all Americans with health insurance using only economic incentives and voluntary choice.[20] However, no country has achieved universal coverage for its citizens through a market based approach that, like the public option, maintains a complex and overlapping set of private and public payers.[21] The CBO estimates that only 11-12 million Americans would opt-into public option enrollment.[22] Furthermore, these new enrollees would mostly switch from their private plans; the public option will attract very few uninsured individuals.[23] Ultimately an opt-in plan would have minimal effects over 10 years on the number of people who would be uninsured.[24]

Additionally, while the public option may save the federal government money, insurance will remain expensive for those who choose to enroll. The CBO estimates that House bills proposing the public option would offer public plans that are only five to eight percent cheaper than private plans.[25] This would translate into only $326 in savings a year for the average household with $50,000 in income that purchases a bronze-tier plan on a health insurance exchange, the plans with the lowest premiums but the highest deductibles..[26] Premiums may remain high because even if the Federal government competes with private insurance for customers, there is too much market consolidation in the health insurance market.[27] Additionally, the government is ultimately interested in health insurance market stability and will likely prefer to keep premiums somewhat high to keep private insurers afloat .[28] Furthermore, high premiums ensure that hospitals and other health care providers get high reimbursements and remain in business.[29]

While the public option cannot create universal enrollment or render health insurance affordable, the policy has other benefits that affect small, but not insignificant, populations. The public health insurance option could benefit, or even be targeted, to specific people or places where the market has failed.[30] Providing a public plan could vastly improve health insurance access in states with few options on the Obamacare health insurance marketplace.[31] The availability of a public option insurance plan may disproportionately benefit racial minorities and rural Americans by providing a new option to populations traditionally underserved by private health insurance.[32] If unable to pass a general public option, politicians may be able to target the public option to places, or populations, with few insurers on the exchange. A government insurance plan is also more likely to enhance treatment for people with chronic diseases or HIV/AIDS.[33] Private insurance has little motivation to attract and cover these patients.[34] Politicians should pursue an option that benefits the aforementioned marginalized groups.


[1] Micah Johnson, et al., Medicare for All: An Analysis of Key Policy Issues, 39 Health Affairs 133, 139.

[2] Samuel L. Dickman, et al., Inequality and the Health-care System in the USA, 389 Lancet 1431, 1437 (2017).

[3] Sherry A. Glied & Jeanne M. Lambrew, How Democratic Candidates for the Presidency in 2020 Could Choose Among Public Health Insurance Plans, 37 Health Affairs 2084, 2085.

[4] Samantha Artiga, et al., Changes in Health Coverage by Race and Ethnicity since the ACA, 2010-2018, Kaiser Family Found. (Mar. 5, 2020), https://www.kff.org/racial-equity-and-health-policy/issue-brief/changes-in-health-coverage-by-race-and-ethnicity-since-the-aca-2010-2018/.

[5] Katie Keith, Health Reform on the Campaign Trail, 38 Health Affairs 1966, 1966 (2019).

[6] Id., Harold Pollack, Medicare for All–if it Were Politically Possible–Would Necessarily Replicate the Defects of Our Current System, 40 J. Health Politics, Policy & L.  923, 925 (2015). See Laurence Seidman, The Affordable Care Act Versus Medicare for All, 40 J. Health Politics, Policy & L. 911, 912 (2015).

[7] Austin B. Frakt & Jonathan Oberlander, Challenges to Medicare For All Remain Daunting, 39 Health Affairs 142, 142 (2020).

[8] Nate Silver, Medicare for All Isn’t That Popular – Even Among Democrats, FiveThirtyEight (Jul 25, 2019, 1:29 PM), https://fivethirtyeight.com/features/medicare-for-all-isnt-that-popular-even-among-democrats/.

[9] Cathy Schoen, et al., Building Blocks for Reform: Achieving Universal Coverage with Private and Public Group Health Insurance, 27 Health Affairs 646, 647, Frakt & Oberlander, supra note 7, at 144.

[10] See, e.g., Guian McKee, Joe Biden’s Health-Care Plan is more than a Half-Century in the Making. Wash. Post (Oct. 27, 2020), https://www.vox.com/2019/7/16/20694598/joe-biden-health-care-plan-public-option, Matthew Yglesias, Joe Biden’s Health Care Plan, Explained. Vox (Jul 16, 2019), https://www.vox.com/2019/7/16/20694598/joe-biden-health-care-plan-public-option.

[11] Jonathan Oberlander, Navigating the Shifting Terrain of US Health Care Reform–Medicare for All, Single Payer, and the Public Option, 97 Milbank Q., Dec. 2019, at 1, 8.

[12] Ganesh Sitaraman & Anne L. Alstott, The Public Option: How to Expand Freedom, Increase Opportunity, and Promote Equality 26-28 (2019).

[13] Id.

[14] Id., Helen A. Halpin & Peter Harbage, The Origins and Demise of the Public Option, 29 Health Affairs 1117, 1117-18 (2010).

[15] Schoen, supra note 9, at 652-53.

[16] See, e.g., Jodi L. Liu & Christine Eibner, National Health Spending Estimates Under Medicare for All, Rand Corp., https://www.rand.org/pubs/research_reports/RR3106.html (Last visited Mar. 8, 2020).

[17] Compare letter from Douglas W. Elmendorf, Dir., Congressional Budget Off., to Fortney Pete Stark, Chairman, Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives, July 22, 2010 [hereinafter Elmendorf] with Congressional Budget Off., Health-Related Options for Reducing the Deficit: 2014-2023 15.

[18] Nate Silver, Medicare for All Isn’t That Popular – Even Among Democrats, FiveThirtyEight (Jul 25, 2019, 1:29 PM), https://fivethirtyeight.com/features/medicare-for-all-isnt-that-popular-even-among-democrats/.

[19] Public Opinion on Single-Payer, National Health Plans, and Expanding Access to Medicare Coverage, Kaiser Family Found. (Feb. 21, 2020), https://www.kff.org/slideshow/public-opinion-on-single-payer-national-health-plans-and-expanding-access-to-medicare-coverage/ [hereinafter Kaiser Family Found.].

[20] Helen A. Halpin, Getting to a Single-Payer System Using Market Forces: The CHOICE Program, 1, 2 (Jack A. Meyer & Elliot K. Wicks, eds., 2001).

[21] Ryan Crowley et al., Envisioning a Better U.S. Health Care System for All: Coverage and Cost of Care, 172 Annals Internal Med.: Vision for U.S. Health Care, Jan. 2020, at 7.

[22] Halpin & Harbage, supra note 14, at 1121.

[23] See Elmendorf, supra note 17.

[24] See Elmendorf, supra note 17.

[25] Compare Elmendorf, supra note 17, with Congressional Budget Off., supra note 17, at 15.

[26] See Rachel Fehr, et al., How Affordable are 2019 ACA Premiums for Middle-Income People? Kaiser Family Found. (Mar. 5, 2019), https://www.kff.org/health-reform/issue-brief/how-affordable-are-2019-aca-premiums-for-middle-income-people/.

[27] Daniel P. Miller & Jungwon Yeo, Res. Collection of Sch. of Econ., The Consequences of a Public Health Insurance Option: Evidence from Medicare Part D 3 (2013).

[28] See Sitaraman & Alstott, supra note 12, at 82,

[29] John Holahan & Linda Blumberg, Urban Inst. Health Policy Ctr., Can a Public Insurance Plan Increase Competition and Lower the Costs of Health Reform?  2, https://www.urban.org/research/publication/can-public-insurance-plan-increase-competition-and-lower-costs-health-reform.

[30] See Sherry A. Glied & Jeanne M. Lambrew, How Democratic Candidates for the Presidency in 2020 Could Choose Among Public Health Insurance Plans, 37 Health Affairs 2084, 2085 (2018).

[31] Sitaraman & Alstott, supra note 12, at 38.

[32] Sitaraman & Alstott, supra note 12, at 41.


[33] Holahan & Blumberg, supra note 27, at 3.

[34] Id.