Whatever Happened to Biden’s Public Option?

In the 2020 elections, then-candidate Joe Biden and many of his congressional colleagues loudly advocated for a federal “public option” health insurance plan. It was framed, at the time, as part of his incoming administration’s response to the pandemic.

“Low-income Americans will be automatically enrolled in the public option at zero cost to them, though they may choose to opt out at any time,” Democrats promised in their party platform.

But since Biden entered office, it’s been crickets. The president hasn’t uttered the phrase “public option” since December 2020, according to factba.se, which tracks his public remarks.

Why the disappearing act? In a word: politics.

“Out of the gate you’d have a huge powerful lobby against the public option — the hospitals — since providers have the most to lose: lots of money,” said Matthew Fiedler, an economist at the Brookings Institution who has studied payment disparities between insurance plans. The health-care industry is the largest lobbying sector in Washington, with more than $132 million spent annually just by hospitals and nursing homes, according to OpenSecrets.

For those who’ve forgotten, the idea was to create a government-sponsored insurance plan to compete with commercial insurers under the Affordable Care Act. The concept, previously backed by President Barack Obama, didn’t make it into the final version of the ACA due to opposition from pretty much everyone in health care.

In theory, a public option structured like Medicare, Medicaid or the military’s Tricare program could save billions in health-care spending by both the federal government and consumers because (like the existing federal plans) it would pay health providers less than commercial insurers. Fiedler said the public option could possibly save money, relative to commercial insurance, even if it paid as much as double Medicare’s rates.

And without having to earn a profit, such a plan could spend more money on patient care.

Unsurprisingly, insurers opposed the public option, but Fiedler said it’s hospital opposition that keeps it shelved.

As an example, Fiedler points to Medicare drug price negotiation, another long shot Democratic priority. Biden got that across the finish line as part of his 2022 Inflation Reduction Act.

“Congress didn’t want to pick a fight with hospitals, but they’re willing to take on drug companies,” Fiedler said.

Biden’s party hasn’t yet put together its official platform for the 2024 election, so perhaps the public option will reappear on his agenda. Spokespeople for his reelection campaign and the White House didn’t respond to emailed questions about it.

The idea still has many fans: Led by Colorado, some states have sought to create their own versions, though their plans rely on commercial insurers to administer the coverage. Insurers were able to tank public option proposals in Connecticut, and they’ve complained that they would lose money under Colorado’s proposal.

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