Bennet’s Plan for a National Public Option Aims to Realize Unfinished Business of the ACA

Health care is an issue that, as Sen. Michael Bennet puts it, "drives people to tears."

Along with Sen. Tim Kaine (D-Va.), the Colorado Democrat is floating a big-idea proposal to ease the pain by increasing affordability, choice, and competition in health insurance.

On February 17, the duo announced the reintroduction of their updated Medicare-X Choice Act, which, they said, "would work within the Medicare framework to establish a Medicare Exchange [or Medicare-X] public option plan in every county in America for individuals and small businesses.”

This isn’t just noteworthy in concept. Bennet and Kaine’s plan could have a real chance to become law, depending on the legislative route they are able to take.

About Medicare-X

The two senators have been working together on Medicare-X for several years. There are a variety of problems that the plan is intended to solve, but chief among them is that health insurance remains unaffordable for many Americans who buy coverage through the individual market rather than getting it through an employer or the government.

Medicare-X seeks to shore up many parts of the Affordable Care Act (ACA), which was passed more than a decade ago. It would set aside $10 billion annually for three years to establish a national reinsurance program, which would reduce insurers' risks by covering the most expensive claims in the individual market in return for lower premiums. The bill calls for allowing the federal government to negotiate drug prices for both Medicare-X and the existing Medicare Part D; offering increased subsidies to benefit consumers whose incomes are above the current threshold for help; expanding the list of essential health benefits; and fixing what is known as the “family glitch,” a problem that has prevented some families from accessing tax credits to offset insurance costs. (A summary of the bill is available on Bennet’s website.)

These proposed changes are significant. But what’s really revolutionary about the plan is a federal public option.

The Medicare-X plan would first be available in areas with limited options for individual market insurance plans or with health care provider shortages. Over the following three years, it would expand into all regions for individual market consumers. In Colorado, around 7% of people get their insurance through the individual market. Finally, in the fifth year, Medicare-X would be open to small businesses. Providers who participate in Medicare or Medicaid would be required to accept Medicare-X enrollees, too.

Impacts in Colorado

If passed, the bill would have implications for people across the country. Here at home, it could have an impact on both existing programs and a potential new state public health insurance option that is under discussion in the legislature.

The combination of a national reinsurance program and expanded availability of subsidies would likely make Colorado’s reinsurance program obsolete. The state-level public option bill hasn’t been introduced yet, but is expected soon. If a state plan were to be signed into law in the coming months, it seems unlikely that it would make sense to have both a federal and state public option designed to help essentially the same group of Coloradans.

The Medicare-X public option differs from the new version of the state plan, called the Colorado Health Insurance Option, as outlined in a recent preview document. The biggest difference is in the government’s role. The federal law would use existing government health insurance infrastructure (the Medicare program) to offer a low-overhead, nonprofit plan; the state proposal would not, at least initially.

Beginning in 2023, the state plan would require private insurers to cover certain health benefits and achieve price reduction targets through negotiating with hospitals, pharmaceutical suppliers, and others. If the pricing targets are not met in the first two years, the state would step in and create a “quasi-governmental entity” to offer health insurance in all counties starting in 2025. Both the Medicare-X plan and the Colorado Option would be offered to individuals and small employers, and the two plans would be fully implemented around the same time.

Medicare-X would initially be available to Coloradans who live in counties with only a single insurer offering coverage on the individual market. That is true in 10 counties this year. Additional financial help would benefit those with incomes above 400% of the federal poverty level who shop through the state’s marketplace; according to the 2019 Colorado Health Access Survey, about 63,000 people in this income range were enrolled in a plan through Connect for Health Colorado. Connect for Health data show Coloradans who didn’t qualify for financial help paid an average monthly on-exchange premium of $403 last year, compared to $135 for those who did. As for the impact of fixing the family glitch? That could benefit as many as 100,000 Coloradans, though the exact number of people impacted by the issue is unknown.

Could it Pass?

Given the close party split in the U.S. Senate (50 Democrats and 50 Republicans) and the ideological diversity within the parties, any major proposals face an uphill battle. The creation of a national public option program is no exception. Given the wide-ranging impacts it would have and the debate it would provoke over the role of government, it seems highly unlikely that such a bill could gain the 60 votes needed to pass via the normal legislative process.

But another route might be available: passing Medicare-X by using the budget reconciliation process. In short, reconciliation is available once per year and is reserved for budget-related items focused on spending or revenue. Bills considered through reconciliation need only a simple majority, or 51 votes, to pass in the Senate, rather than a supermajority of 60 votes. They are not subject to the threat of a filibuster. The process has been used to enact 21 measures since 1980, including new tax cuts and amendments to the ACA.

It is possible that the Medicare-X plan could be considered through budget reconciliation, which would greatly increase its chance of success. Bennet and Kaine, who are both viewed as moderate Democrats, say their plan aligns well with President Joe Biden’s stated health care goals — and they hope it can be included (fully or in part) in this year’s reconciliation bill.

Federal Policy is Back

Regardless of what happens with Medicare-X, its introduction is noteworthy because it signals the return of major federal health policy proposals, in contrast with little interest in bold strokes during the Trump years. While the ACA features prominently in President Barack Obama’s legacy, it was signed into law just 14 months into his eight-year term — and seemed to expend much of his political capital for big policy changes. In the years since, states have been expected to innovate and lead.

In a video announcing the new bill, Bennet says, “We fought for a public option as part of the original [ACA] legislation. I think the case for it has only grown stronger over the last decade.” Last year, to mark the ACA’s 10-year anniversary, CHI published a 10-part series on some of the law's achievements and the remaining work needed to make health insurance more accessible and affordable for Americans.

Indeed, the ACA has accomplished a great deal but has long been considered unfinished business by Democrats. With Medicare-X, Bennet hopes to pick up the torch.

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