Recently, policymakers in Washington, D.C., and throughout the states have been discussing proposals that would implement either a public option or single-payer healthcare system in response to the ongoing market challenges of low insurer competition and high prices for private market coverage. Both of these programs are public health insurance plans, but they are administered very differently and would have drastically different impacts on the healthcare system, the outside market, and the role of agents and brokers. NAHU strongly opposes both a public option as well as single-payer either at the federal or state level for the devastating impacts they could have on private market coverage and consumer choice.

A public health insurance plan, also known as a “public option,” is a government-sponsored plan designed to compete alongside private insurers. It is intended to address the market failure where consumers are faced with only one or two health insurers offering coverage in their area. Variations of the public option would limit the plan’s availability to only those counties with little existing competition or where one insurer was the dominant player in the market, and also limit its availability to consumers purchasing coverage through the state or federal marketplaces. The plan would be required to comply with requirements related to other state or federal marketplace plans, and offer various level plan options. Premiums would be established according to state or federal marketplace rules. Agents and brokers could remain in the marketplace selling private-market coverage, although it is unclear if they would be able to place consumers in the public plan or be compensated for doing so.

As a public plan it could have the power to dictate prices, provider networks, and provider reimbursements. It could also potentially indemnify itself for unexpected costs, allowing it to offer insurance at below-market costs. Given these lopsided advantages, NAHU strongly opposes the creation of a public option as it could create an unequal field that would never compete fairly with the private market, could exacerbate the worst elements of existing public health programs including inefficiencies, high costs, and bureaucracy, would be financially infeasible in the long run, and could potentially devastate existing private market coverage.

The public option is politically unlikely to be implemented at the federal level. Even at its zenith of support in 2009, there have never been enough votes or political viability for a public option to become law. At the time, Democrats controlled a 60-vote supermajority in the Senate and held a 76-seat margin over Republicans in the House (255-179). Despite these large majorities in each chamber, only roughly a third of each chamber’s Democrats vocally supported a variation of a public option. While it was passed by the House by a vote of 220-215 in November 2009, 39 Democrats voted against it, and there was never enough support to include this proposal in the final ACA package. However, its political feasibility could be higher in states that have legislatures dominated by Democrats by wide margins who support such a plan. NAHU is closely monitoring these efforts.

Single-payer is a health insurance system that is wholly sponsored and administered by a single entity with no direct private market competition. It is intended to address the market failures of access and cost issues by providing insurance coverage to all eligible individuals (U.S. citizens, residents of a state). Private insurers would not be able to offer any primary coverage, although in some proposals they would be able to offer supplemental coverage to those who choose to purchase. Providers would be compensated directly by the government, which would also set reimbursement rates, networks, and costs of services. Rationing of services would be among its strongest tool to control costs. The need for agents and brokers could largely be limited as eligible consumers would be automatically enrolled in the public coverage, although that would depend on the presence and breadth of an additional supplemental coverage market.

Existing public healthcare plans like Medicare and Medicaid already demonstrate the challenges faced by government-run insurance plans and their ability to provide adequate coverage to their beneficiaries. They may provide less coverage and restrict provider access more than the average employer-sponsored plan, with the Congressional Budget Office estimating that the benefit package for Medicare is 15% below the average employer-sponsored plan. Under Medicaid, specialists are often inaccessible without long waits. Extending this government-run coverage to all Americans would exacerbate these inefficiencies, high costs, and bureaucracy, along with unilaterally restricting consumer choice. Further, the experience of the ACA’s healthcare CO-OP program, where 16 of the 23 non-profit cooperatives failed after their first three years, demonstrates that challenges that would plague a fully government-run insurance plan.

Single-payer is political unlikely to be implemented at the federal level as it is more radical than the already political unlikely public option. However, there are several state proposals currently being considered that would implement single-payer. In Colorado, Amendment 69 will appear as a question on the November general election ballot asking voters to approve "ColoradoCare." The $25 billion program, funded through a 10% payroll tax, would operate a single-payer cooperative, extending coverage to anybody who earns income and lives in Colorado up to age 65, replacing the existing state-based marketplace, Connect for Health. Additionally, a similar push for single-payer is under consideration by the New York legislature. A bill passed the Democratically controlled House by a two-to-one margin in May 2015, but has not passed the Republican-led Senate. This plan would effectively eliminate private market coverage in the state to allow for the public program to provide universal coverage. It would be funded through payroll assessments (80% employer-paid and 20% employee), and a progressive income tax, at 9% for incomes between $25,000 and $50,000, and increasing to 16% for incomes over $200,000. NAHU is closely monitoring these efforts.

NAHU opposes both a public option and single-payer at all levels. Last month the NAHU Board of Trustees adopted a position paper outlining our concerns with the public option. The paper notes that instead of implementing a public program we recommend allowing consumers to be able to use their advanced premium tax credits both inside and outside of the marketplaces. Since credits are already paid directly to carriers, there is no reason why this very simple option would not be the very first choice if there were no longer carriers offering coverage inside of the exchange.