This week, Washington State passed a new law designed to offer consumers a so-called “pubic option” for buying health insurance. The general idea is that the state will launch its own health insurance program to compete with the marketplace. Unlike Medicare or Medicaid, anyone would have the option to purchase coverage through the “public option.”
The public option is targeted at taking the pressure off of people who don’t receive health insurance through their employer, but make too much money to get subsidized coverage through the Affordable Care Act (a/k/a Obamacare). Folks in this situation, often small business owners or the self-employed, have struggled with substantial premium increases in recent years.
The public option is not true insurance. Instead, Washington State will contract with insurance companies to administer the system under the state’s control. The main idea is that the public option caps the amount it will pay doctors, hospitals and other medical providers at 160% of the rate Medicare would pay for the same services. Medicare rates are typically quite low compared to what an uninsured patient would pay.
The public option is hoped to avoid the steep premium increases that have become an annual routine for most health insurance. Rates increased 13.8% in 2019; they increased 36% in 2018.
Other states, including Colorado and Connecticut, are considering similar legislation.
Seattle Insurance and ERISA Blog 