Healthcare industry groups likely will not be pleased to hear that Democratic presidential candidate Hillary Clinton has just renewed her call for government-run health plans to compete against private insurers in the Affordable Care Act exchanges.
Her newly updated campaign website said Clinton, who, like Barack Obama, backed a government-run health plan option during the 2008 presidential campaign, will “continue to support a 'public option'.” It said the public option would “reduce costs and broaden the choices of insurance coverage for every American.”
Supporters argue that the existence of a public plan would force private insurers to keep their premiums down and improve their benefits and service, while opponents said it would undermine the private insurance markets and shift costs to commercial and employer health plans.
But rather than seeking to establish the public option plan through federal legislation, Clinton would “work with interested governors, using current flexibility under the ACA to empower states to establish a public option choice.” That presumably refers to the broad waiver authority under Section 1332 of the law allowing states to establish tailored health systems that achieve the ACA's coverage and cost goals.
This may mean that a Clinton administration and willing states could adopt the public option without going through Congress, which may remain under Republican control after the November elections.
Still, there almost certainly would be major political battles over the public option at the state level. Healthcare providers have major concerns about whether a government-run plan with a large market share would drive down their payment rates. Insurers fear they wouldn't be able to compete effectively against a public plan with strong regulatory and bargaining powers. Other observers are leery that a public plan would attract a disproportionate share of sicker enrollees and wouldn't be financially viable.
Harold Pollack, a liberal healthcare policy expert at the University of Chicago who favors the public option, said the supply side of the medical economy would oppose government efforts to set prices and terms of care. “It's a very powerful coalition, including every hospital and every vendor, that will be resistant to a public insurance option.”
Experts said that while Clinton previously has supported the public option approach, her new focus on it probably is a response to the enthusiasm her Democratic primary opponent Sen. Bernie Sanders has generated with his single-payer government health insurance proposal.
“This signals to the Democratic base that she's offering a government option which might appeal to Sanders' supporters,” said Paul Howard, director of health policy at the conservative Manhattan Institute for Policy Research. “At the same time she's hedging her bets by saying the states could take it or leave it.”
Pollack likes Clinton's state waiver approach. He said states such as Illinois, Massachusetts and New York would be better able than Congress to craft the political bargains needed to establish a public option plan. But he cautioned that the public option could prove a serious distraction in implementing other measures Clinton proposes to make healthcare and prescription drugs more affordable to consumers.
He recalled the huge political battle over the public option proposal in 2009 and 2010 before President Obama and congressional Democratic leaders quietly left that feature out of the final ACA legislation due to opposition from a few key Senate Democrats. “The public option sucks up all the oxygen,” Pollack said.
Clinton also listed other new healthcare proposals on her updated website this week. She would cap family premium spending on exchange plans at 8.5% of income, down from a maximum of 9.6% currently. She would allocate $500 million a year to improve Obamacare education and enrollment efforts to reach the estimated 16 million uninsured people who are eligible for Medicaid or subsidized exchange coverage but have not signed up. And she endorsed the Obama administration's proposal to allow states that belatedly expand Medicaid to receive a 100% federal match for a full three years.
She previously proposed requiring health plans to cover three annual sick visits to a doctor without applying the deductible; giving insured people a $5,000 per family refundable tax credit for out-of-pocket costs exceeding 5% of income; barring providers and insurers from charging patients out-of-network bills for services received in an in-network hospital; strengthening state authority to block excessive insurance premium increases; capping consumers' out-of-pocket costs for prescription drugs; and letting Medicare negotiate drug prices.
The Manhattan Institute's Howard argued that the only way Clinton's public plans could deliver cheaper products would be to pay Medicare-level rates and offer extremely narrow provider networks, which wouldn't be popular with providers or consumers. “The reality is that unless you specify what you're not going to cover and you control utilization, you'll have higher costs, which reduces the desirability of having the public option," he said.
Pollack acknowledged the daunting political and administrative challenges in establishing public option plans. “There is no immaculate conception to a public insurance program,” he said. “It has many moving parts we have to get right. Maybe allowing different models to emerge in the states, some successful and some not, may give us a road forward.”