3 Ways the CBO’s Public Option Design Review Can Impact Consumers

The Congressional Budget Office (CBO) recently shared a guide with implementations and suggestions about designing a federally managed public option health insurance plan. Congressional sentiment supporting the public options resulted in the need for analysts to explore various scenarios and outcomes of such a design. With members of Congress already discussing the introduction of plan proposals, future implementations and how they will impact healthcare consumers must be considered.

The CBO analysts noted eight different choices that policymakers will have to consider when developing the public option. The following are the eight key questions that must be accounted for before the public option is proposed:

• Would the public option be subject to state insurance regulations?
• Will metal tiers be utilized?
• How and who will determine rates and prices?
• Are providers required to participate?
• What are the estimated overhead costs? What administrative actions need to take place?
• How will risk adjustment transfers be accounted for?
• Where are the funds being drawn from?
• To whom and where would the public option be offered?

Should Congress introduce legislation, it’s these eight points that matter most for developing any public option solution. Each of the eight questions have multiple possibilities that will impact both businesses and consumers with various outcomes, setbacks, and improvements to the current offerings. W3LL is an expert in all things insurance and will guide consumers through some of the more details and highlight the key takeaways of this CBO guide. As health plans adapt to upcoming changes, W3LL will keep you updated and guide you to make the best health benefits decision for you.

1. Changes in Coverage and Prices are Undetermined and May have a Wide Scope

With so much to be determined, consumers must keep their options open as lower prices might be on the horizon. Factors such as income level and geographic region may have a significant impact on the price of the public option offerings. Based on potential design choices, the public option’s premiums could result in additional savings. Especially in markets with limited options for insurers, the addition of the public option would increase choices to private plans and make the marketplace more attractive. Increased traffic to limited marketplace can potentially result in increased savings due to the stability large numbers of enrollees bring.

The CBO analysts suggest a public option will likely point to three key distinctions that will impact access to coverage:

1. A public benefit option, managed and administered by the federal government, would have the ability to offer the same types of benefits and coverage everywhere. These benefits could also vary with each state, allowing for customization. Consumers should be aware of these distinctions as prices could be lower or higher based on the geographical region.

2. A federally managed public option would more than likely have the greatest impact on uninsured Americans who may not qualify for the ACA premium tax credits due to the amount they make.

3. Should the public option become available, Medicare providers would also be affected. These providers could either have a choice to participate, or there could be a participation requirement. Medicare options could change or become more accessible.

Citing a public option plan with a similar or higher premium than what’s available today might not see a difference. However, a low premium public option plan would probably reduce the benchmark subsidies and premiums, per the CBO analysts.

2. The Public Options Supplies a Safety Net for Changes Initiated by the ARPE

A low-premium public option would benefit those who are currently ineligible for premium tax credits and subsidies. A low-premium public option would have the largest effect on the uninsured rate of those ineligible for marketplace subsidies due to their household income being above the federal poverty level. This category is often overlooked and contributes to a large portion of the current uninsured rates due to lack of employee health benefits options alongside high-cost premiums with no potential for savings.

The current administration has made lower premiums and expanding the availability of tax credits a priority; the public option can be seen as an extension of this sentiment.

The recent American Rescue Plan Act of 2021 (ARP) did extend subsidy eligibilities to this group of Americans through next year, but this change is not permanent. Congress has yet to make the changes brought by the ARP permanent, meaning many Americans may lose their newfound savings at the end of the year. If the ACA subsidy structure reverts to what it was before the ARP, anyone with income higher than 400% of the federal poverty level could find savings in a public option.

With the changing regulations and instability surrounding the ACA since its conception, additional efforts to support increased affordability should not be taken for granted.

3. Providers Might be Forced to Lower Their Rates to Stay Competitive

There would also be an impact on private health insurance premiums due to increased competition in the Marketplace. Should a public option become available, premiums could either be higher or lower than private or non-participating plans. Depending on the rules behind risk assessments, whether the public option must adhere to established state regulations, and the projected administrative overhead this new development can drive down premium costs across the board. With increased competition, providers will be placed in a tough position and may have to lower their rates to stay competitive.

Any changes to the insurance landscape can have resonating effects on the entire industry. The CBO guide suggests a public option platform would likely attract a mix of Americans who need health insurance. Those who currently have family or individual coverage, for example, might see increased benefits of such a federally managed plan. Even those with employer-paid health insurance might see reduced costs.

Need help understanding where to begin or need to enroll in a Marketplace health insurance plan? Browse with W3LL! Our free service supplies the tools needed to sort and compare health insurance plans to help you get the most out of what the ACA has to offer and stay up to date on changing regulations.