Proposals to Provide Affordable Coverage to All Americans

Written by: Tom Hayes on May 13, 2009 12:14 AM EDT

SECTION III: Public Health Insurance Option

Current Law

There is currently no federal public health insurance option for non-disabled individuals under 65 years of age. Medicare, however, is an example of a federal public health insurance option for the aged and certain disabled individuals. Under Medicare, Congress and the Centers for Medicare and Medicaid Services (CMS) in the Department of Health and Human Services (HHS) determine many parameters of the program including eligibility rules, financing (including determination of payroll taxes, and premiums), required benefits, payments to health care providers, and cost sharing amounts. Despite the public nature of this program, CMS subcontracts with private companies to carry out much of the administration of the program.

Proposed Option A

There are several major issues that must be resolved in detailing a public health insurance option.

The first issue is how providers will be reimbursed for services they provide to enrollees of the public option. The second is whether or not the public option will be required to establish provider networks or can it compel providers to participate. The third is whether the public option will be required to have reserve funds to cover their incurred but not reported claims. The fourth is whether or not the premiums collected by the public option will be required to cover costs or can shortfalls will be subsidized by the federal treasury. Finally, there is the issue of administration of the public option and whether it will be done by a federal agency or by a third party.

Three separate options for a public health insurance plan are described in the "Proposals to Provide Affordable Coverage to All Americans" document, found at: http://www.finance.senate.gov/sitepages/leg/LEG%202009/051109%20Health%20Care%20Description%20of%20Policy%20Options.pdf

Option B does not include a public health insurance option and instead relies on private options in a "reformed and well regulated private market."

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