What is the public option?

The US Senate begins the debate on health care reform withhin the next couple of weeks, I thought it useful for readers to understand what one of the primal points…public option. What is it? Why has it stirred so much controversy?

During the 2008 Presidential Election, congressional democrats was united behind health care reform. Public options were promoted by Barack Obama during the election. He and congressional democrats believe this would drive down premiums. In contrast, health insurance companies have complained that this utility would shift the costs to them. Several health policy experts believe that this public option is not a replacement of Medicare coverage. Thus, a unique approach to increasing competition in the market place. Which should ideally mean–quality coverage for all. There is also the argument that public option has distinct strengths (Hacker, 2009). It has also been suggested that public health insurance programs have sustained quality, while reining in costs in comparison to private insurers.

Medicare, considered a behemoth, has also set the standard for private insurers. CMS unique quality standards, put the agency at an advantage in terms of electronic health record implementation and the subsequent costs compared to private insurers (considering the recent privacy breaches at the VA). It has also been suggested that private insurers pass their respective operating costs to their customers. Which ultimately leads to higher premiums and perhaps, decereased quality of care. Considering baby boomers have begun to mature into Medicare and Medicaid, it is essential [in terms of cost constraints] that quality of care not be compromised.

“A public health insurance option (public insurance option or public option for short) is a propose health insurance plan that would be offered by the U.S. federal government. In Affordable Health Care for America Act (H.R. 3962), and its predecessor H.R. 3200, it falls under the category of a Qualified Health Benefit Plan. The federal government would create a health insurance plan financed entirely by premiums, to provide citizens not covered by employer or other state insurance plans an option for health insurance that would compete with private insurers. There are no subsidies set aside exclusively for a public health insurance plan in any of the bills currently before Congress.[1] The plans stated in the Senate HLP Committee and H.R. 3962, the two that contain clauses establishing a public insurance option, require the repayment of “seed money” to the Treasury over a ten year period.[2]”


Hacker, J. (2009). National Health Reform: Key To Cost Control and Quality Coverage. Retrieved from http://institute.ourfuture.org/files/Jacob_Hacker_Public_Plan_Choice.pdf on September 22, 2009.

Substack subscription form sign up
The material in this press release comes from the originating research organization. Content may be edited for style and length. Want more? Sign up for our daily email.