Health Care Financing Reform: (96) The Public Options in the House and Senate Bills

     It is well-known that the House bill, the Affordable Health Care for America Act, contains a "Public Health Insurance Option" - a government-run health insurance company that would have competed with private insurers to provide coverage for American citizens.  It is also well-known that the Senate rejected this provision in its bill, the Patient Protection and Affordable Care Act.  Less appreciated is the fact that the Senate bill contains two provisions that would extend government financed health care to millions of more people than the "public option" in the House bill would.

     The Senate rejected the "public option," even with "opt out" or "trigger" mechanisms that would have made the program optional with the states or contingent upon circumstances such as lack of competition in the marketplace or rising costs.  However, the public option was not expected to cover very many people, under either the House or Senate version of health care reform.  The CBO estimated that under the House version of the reform bill six million people would have enrolled for coverage by 2019, and that the Senate plan would have attracted only two or three million enrollees by that time.

     However, the Senate bill contains two provisions that promise to extend efficient, low-cost, government-financed health care to tens of millions of American citizens - the Basic Health Plan introduced by Senator Maria Cantwell (D-WA), and additional funding for Community Health Centers which was included at the urging of Senator Bernie Sanders (D-VT).  I have written about these provisions previously (here and here). 

     The Kaiser Family Foundation website contains an informative side-by-side comparison of the House and Senate bills.  Here is their description of the Basic Health Plan, which would allow the states to use the money that would have gone to low-income individuals to purchase health insurance for them as a group:

Permit states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange. States opting to provide this coverage will contract with one or more standard plans to provide at least the essential health benefits and must ensure that eligible individuals do not pay more in premiums than they would have paid in the Exchange and that the cost-sharing requirements do not exceed those of the platinum plan for enrollees with income less than 150% FPL or the gold plan for all other enrollees. States will receive 95% of the funds that would have been paid as federal premium and costsharing subsidies for eligible individuals to establish the Basic Health Plan. Individuals with incomes between 133-200% FPL in states creating Basic Health Plans will not be eligible for subsidies in the Exchanges.

     Essentially, under the Basic Plan the federal government would subsidize the states to contract with health insurance companies - or perhaps even provider systems - to provide health care for persons earning less than double the federal poverty level.  (The FPL for 2009 is $10,830 for an individual and $22,050 for a family of four.)  It is a safe assumption that by pooling the purchasing power of every individual and family earning between 133% and 200% of the federal poverty level into one group plan, the state could purchase insurance at far lower cost than these people could acting as individuals.  Furthermore, this would save the federal government money - it would pay the states only 95% of what it would have paid the individuals.  I expect that many states would choose this option, and that participation in the Basic Plan will far exceed what enrollment in the "public option" would have been.

     In addition, the Senate bill establishes a "Community Health Services Fund" (starting at page 329 of the Manager's Amendment) which vastly expands funding for community health centers and the National Health Service, as well as funding a three-year demonstration project in up to ten states that would provide low-cost health care to the uninsured.  The Community Health Services Fund could end up supporting primary medical and dental care and establishing medical "homes" for tens of millions of Americans.

     In my opinion, the Basic Plan and the Community Health Services Fund - each of which may contract with for-profit and non-profit health care companies to provide care for low-income persons - are far more promising than the public option contained in the House bill or the one that was initially contained in Senator Reid's bill.

     Our common goal is universal health care that is both affordable and of high quality.  I predict that House Democrats will embrace these two provisions as a more than adequate substitute for the public option contained the bill that they originally enacted, and that many Republicans, while still voting against the bill, will find these provisions attractive - particularly in states with large rural areas that rely on community health centers for primary care.

Visit Professor Huhn's website on health care financing reform for links to information about proposed legislation, studies and reports, public agencies, and private organizations concerned with this issue.