Public Options for Individual Health Insurance
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Public Options for Individual Health Insurance | Web version
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Congressional alert
June 1, 2020
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grinvalds/Getty Images
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As policymakers look for ways to control costs while improving health care access, there has been growing interest at the state and federal levels in a “public option” for individual market insurance. According to a new report, offering a public option for people who buy their own insurance could lower the cost of premiums, but on its own it is unlikely to substantially increase the overall number of people with coverage.
Using RAND’s COMPARE microsimulation model, researchers estimated how the addition of a federal public option for individual market insurance could affect overall insurance coverage, individual market enrollment, premiums for individual market enrollees, and federal spending. Modeling four scenarios for adding a public option for individual coverage available nationwide, researchers found:
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- Premiums were between 10% to 27% lower than private individual market premiums.
- The number of uninsured people fell by less than 1% to 8%.
- Federal spending on Advance Premium Tax Credits (APTCs) fell with the introduction of the public options in all scenarios, with savings ranging from $7 to $24 billion annually. The reduction in federal APTC spending was driven by the silver-level public option becoming the benchmark for setting subsidy levels in some scenarios, changes to the risk pool, and competition effects.
- 5.1 million to 12.1 million people were “better off” (becoming newly insured or paying less for an equivalent or more generous plan), and 2.2 million to 6.8 million people were “worse off” (becoming uninsured or paying more for an equivalent or less generous plan).
- Nearly all of those who were worse off had income below 400% of federal poverty level (FPL), and received lower APTCs or faced higher private individual market premiums.
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Policymakers could consider how reinvesting federal savings in larger tax credits for people with incomes below 400% of FPL could be used to enhance or provide additional tax credits to make the public option more beneficial to lower-income people.
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For questions or to discuss this research, please contact Jared Perkins. |
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RAND Congressional Resources Staff
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Experts and Research Available to You
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