Mobile Menu

Public Options

Given many of the shortcomings of the private provision of healthcare in the United States, there are other circumstances in which states can directly provide necessary healthcare goods or services. Whether stepping in to provide health insurance to its citizens or to ensure the production of essential medications, public options also provide essential discipline to private healthcare providers. If the government offers low-cost or reliable services, private providers or manufacturers would need to meet those standards, whether by matching the low costs or fulfilling insurance obligations to cover certain treatments.

Establish a Public Insurance Option

The Problem

With successive reforms to the American healthcare system attempting to attain universal healthcare, American health insurance is still a patchwork of different government and private programs, ranging from Medicare for the elderly, Medicaid for low-income Americans, the VA for veterans, employer-sponsored private insurance for those of working age, as well as many health insurance plans on private state exchanges that were created by the 2010 Affordable Care Act. Despite these efforts, about 10% of the American population remains uninsured.[1]

Just as troubling, even those with insurance coverage often find it less reliable than expected. Insurance companies looking to maximize their profits will often deny claims for health procedures or services that they are obligated to pay for[2], or make patients and doctors jump through a range of bureaucratic hoops in order for their insurance to pay for covered services.

The Solution

State lawmakers can respond to this problem by establishing a public insurance option, following recent laws in Washington (2019), Nevada (2021), Colorado (2021), and Minnesota (2023). While the insurance would not be a free public benefit, it would have key benefits:

  • First, without the profit-maximizing incentives of most private health insurance companies today, a public insurance option would serve as a reliable source of health insurance for citizens who have found coverage repeatedly denied incorrectly by private health insurance plans.
  • Second, the existence of a public insurance option that upholds honest insurance and claims practices would impose discipline on private insurance companies in the state. For fear of losing customers and employers to a public plan that reliably and honestly provides coverage, private insurance would instead need to honor their coverage commitments to patients.

Notes

[1] Jennifer Tolbert, Patrick Drake, and Anthony Damico, “Key Facts About the Uninsured,” Kaiser Family Foundation, December 19, 2022, https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/#:~:text=The%20uninsured%20rate%20dropped%20in,to%202021%20(Figure%201).

[2] For example, see David Armstrong, Patrick Rucker, and Maya Miller, “UnitedHealthcare Tried to Deny Coverage to a Chronically Ill Patient. He Fought Back, Exposing the Insurer’s Inner Workings,” ProPublica, February 2, 2023, https://www.propublica.org/article/unitedhealth-healthcare-insurance-denial-ulcerative-colitis; Mari Devereaux, “Health systems see increasing claim denials as payer ‘delay tactic,’” Modern Healthcare, November 21, 2022, https://www.modernhealthcare.com/insurance/insurance-claim-denial-rates-rising-health-systems-struggle.

Implement Public Drug Manufacturing

The Problem

Through manipulation by pharmaceutical companies and pharmacy benefit managers, many essential medications have become more and more expensive over the years despite no real improvements. Insulin, for example, costs very little to make and is essential for diabetics to survive, but American patients find themselves paying thousands of dollars per month for it.[1]

The Solution

State governments could solicit bids for their own contracts to manufacture key medicines, allocating their own budgets toward producing medicines that cost very little to make but are currently unreasonably priced in private markets.

Model Legislation

California has allocated $50 million of the state budget to produce low-cost insulin through a 10-year contract with nonprofit drug manufacturer Civica.[2]

Notes

[1] Dzintars Gotham, Melissa J. Barber, and Andrew Hill, “Production costs and potential prices for biosimilars of human insulin and insulin analogues,” BMJ Global Health, 2018, https://gh.bmj.com/content/3/5/e000850.

[2] Emma Bowman, “California enters a contract to make its own affordable insulin,” NPR, March 19, 2023, https://www.npr.org/2023/03/19/1164572757/california-contract-cheap-insulin-calrx.