The Democratic Push for a 'Public Option on Steroids'

After beating back the repeated Republican efforts to repeal the Affordable Care Act, Democrats, for the first time in years, are taking the offense on health care. While the flashiest proposal—for an entirely government-run system—remains a distant aspiration, Democrats are again looking for new ways to expand Washington’s role in shaping the health-care system.

Their ideas include new plans to expand coverage, restrain drug prices, and create a public competitor to private health-insurance companies. Encouraging all of these efforts are polls showing that support for the ACA clearly increased during the long legislative struggle over its future.

“People are increasingly happy with the Affordable Care Act, but they are increasingly unhappy with the health-care system writ large,” said Senator Chris Murphy, a Democrat from Connecticut who has co-authored one of the most ambitious proposals. “I think there is a greater willingness to accept a bigger role for public programs in repairing the health-care system.”

The most sweeping Democratic proposal is the plan from Vermont Senator Bernie Sanders to create a national health-care system in which government would become the “single payer” for all medical services, eliminating private insurance. But while that long-standing liberal goal has newly galvanized many activists, most Democratic officials and policy experts still consider single-payer plans politically unrealistic because they are too costly and provide government too much control over health-care delivery.

The more relevant movement among Democrats is the revival of ideas to create a government-run insurance option to compete with private insurers on the ACA exchanges. That so-called “public option” was a top liberal priority during the initial debate over the ACA. Then, as now, proponents argued that a public insurance competitor—because it would not need to generate a profit—could offer a less expensive alternative and pressure private insurers to cut their premiums. Back in 2009, the House included a public option in the ACA version it passed, but the provision was dropped in the Senate amid opposition from several centrist Democrats led by Joe Lieberman, an independent from Connecticut who caucused with the party.

Two groups of Democratic senators have recently released bills to create a public option, both of which envision a considerably more aggressive role for government than even the House proposal did nine years ago.

One plan, from Senators Michael Bennet of Colorado and Tim Kaine of Virginia, would phase in the new public option. Americans buying coverage on the individual insurance market would be able to purchase it starting in 2020 in areas where few or no private insurance options are available. By 2023, the public option would be available for individuals nationwide. And in 2024, small businesses would be allowed to buy into the plan.

An alternative proposal, from Murphy and Oregon Senator Jeff Merkley, would move faster and further. It would make a public option immediately available not only to individuals, but also to employers of all sizes. And unlike the Bennet-Kaine plan, the Murphy-Merkley bill would also change how the ACA’s subsidies are distributed, by extending eligibility further into the middle class to help people buy coverage and by making those subsidies more generous.

Notably, both plans link the public option much more firmly to Medicare than the Democrats did in 2009. The plan the House approved back then encouraged hospitals and doctors that accepted Medicare to participate in the public option. But it also allowed them to opt out, and permitted them to charge participants in the new plan more than the rates Medicare pays.

Both of the new proposals would push providers much further, requiring those who participate in Medicare to accept patients choosing the new public option. That’s a huge lever, because few physicians can afford to renounce participation in Medicare. Both proposals would also require participating providers to accept Medicare reimbursement rates for the new patients (though each allows the government some wiggle room to raise rates if required to maintain a viable network). And, for good measure, each plan embraces the longtime liberal aim of empowering Medicare to use its buying power to negotiate for lower prescription-drug costs. Murphy told me his own bill offers a “public option on steroids” compared with the 2009 model. To a lesser degree, so does the Bennet-Kaine proposal.

This shift partly reflects the leftward tilt in the Democrats’ internal center of gravity since 2009. But mostly it reflects the belief among Democrats that the public’s surprising support for the ACA—particularly the law’s expansion of Medicaid—suggests there may be greater tolerance than previously assumed for aggressive government action to restrain health-care costs. To critics who argue that a public option might lead to a government-run single-payer plan by pricing private insurers out of the market, Murphy, in effect, says: So what? “I don’t foreclose the possibility that ultimately enough people will choose [the public option] that it would be hard for private insurers to stay in business,” he told me. “But that would be up to consumers.”

Compared with Sanders’s plan, the public-option proposals present only an incremental expansion of the government’s role within the health-care system. But Republicans think they could still trigger old public anxieties about a government “takeover” of health care. The push for a public option “opens [Democrats] up instantly to a charge they will go too far in terms of getting government involved in health care, a continued weakness they still have with voters,” said Bill McInturff, a veteran Republican pollster who has extensively studied attitudes about health care.

The fact that just one Senate Democrat in a competitive race this fall has endorsed either plan—Wisconsin’s Tammy Baldwin is on the Murphy-Merkley bill—may reflect hesitance over whether McInturff’s instincts are right. The health-care debate over the past 18 months has shown how much of the public is unwilling to roll back the ACA. The next 18 months may measure how many Americans are willing to advance beyond it.