A public health insurance option can be used to achieve a range of policy goals. But, like most challenging health care policies, policymakers will want to weigh the advantages and disadvantages, including the various tradeoffs, of adopting a public option. Here, we highlight several common policy goals that policymakers could pursue through a public option. Our team is available to support policymakers in developing and considering policy goals, public option design, and any associated tradeoffs.

Containing Health Care System Costs

A leading rationale for a public option is to contain costs in the health care system. Cost savings could come from a number of sources, including decreased provider and pharmaceutical payment rates, lower administrative costs, and eliminating the need for a profit margin. A lower-cost public option plan could also spur competition, leading to similar cost reductions among competing private health insurance plans.

Improving Affordability and Access to High-Quality Coverage

A public option can be designed to offer lower premiums for families and/or employers, while providing comprehensive benefits. By providing a more affordable coverage option, a public option can expand the number of people with high-quality health insurance. Public option plans can also set lower out-of-pocket costs relative to private plan offerings by, for instance, setting lower deductibles or covering more pre-deductible services. But these decisions involve tradeoffs, meaning policymakers will want to consider their options.

Increasing Choice

A public option can provide families and/or employers with an additional choice for comprehensive coverage by competing directly against private health insurance plans. Public option plans can also present a stark contrast to most private health insurance plans by offering a truly nonprofit coverage option with no need for profit or revenue maximization that drives private health insurers.

Expanding Public Delivery System Reforms

A public option can be used to expand the scope and impact of new and existing public initiatives to improve the quality or value of health care by extending them to a broader segment of the population. Savings from a public option plan could also be used by federal or state governments to promote equity and reduce disparities in health care.