Public Option Plan Introduced in the Senate

February 19, 2021
by Margaret Faso

Senate Democrats reintroduced the Medicare-X Choice Act, which creates a public option close to what President Biden campaigned on and restarts the debate on government-run health care plans.  The measure, which would shift costs to employer plans, could be included in the next budget reconciliation process, thus avoiding a Senate filibuster.

The public option plan follows the Medicare framework but will be available to younger populations.  The measure includes:

• Prohibition on cost-sharing for primary care services in addition to the essential health benefits required under the ACA.
  
  
• Increased subsidies for those having incomes below 400% of the Federal Poverty Level (FPL), including zero premiums for those living at or below 150% FPL.
  
  
• Expanded subsidies to families above 400% FPL up to 8.5% of their income.
  
  
• A fix to the “family glitch” so that affordability will be determined based on the cost of a family plan, not an individual plan.
  
  
• Three years of funding for a national reinsurance program at $10 billion per year.
  
  
• Authority for the HHS Secretary to negotiate Medicare drug prices.

Potential problems for employers: Because the bill would utilize Medicare reimbursement rates for the public option, health care providers would shift costs to employer plans.  Employer plans not having access to Medicare-negotiated drug prices would also shift costs.  Further, fixing the "family glitch" without a safe harbor for employer plans could expose employers to ACA penalties because employers will not know if an employee's contribution for family coverage exceeds their household income, which is data they don't have or want to ask employees for.  

The public option plan would first be available in parts of the country, mostly rural, where there are limited insurers on the individual market or where premiums are higher.  By 2025, the public option would be available everywhere in the U.S. 

The plan also includes a requirement for providers who participate in Medicare and/or Medicaid to also accept Medicare-X patients.  Providers would be reimbursed at 100% of the Medicare fee-for-service rates and, in rural areas, up to 150% of Medicare rates.