Across the country, policymakers, healthcare stakeholders and consumer advocates are motivated to expand affordable coverage, with the overarching goals of lowering the uninsured rate, addressing affordability and access to care issues (such as high premiums, deductibles and cost-sharing), and reducing the cost of healthcare borne by individuals and state and federal governments. Bolstered by the popularity of public health insurance programs and public interest in increasing insurance market stability, policymakers and stakeholders are turning their attention to government-sponsored “buy-in” programs or “public options.”
A buy-in program (which can include a public option) involves the federal or state government offering consumers a new, more affordable healthcare coverage option by leveraging, in some way, the administrative savings and bargaining power of public programs, such as Medicare or Medicaid. Buy-in programs can be offered through private plans, like Medicare Advantage or Medicaid managed care plans, or through direct arrangements between the government and healthcare providers. While buy-in programs can vary widely and be tailored to meet specific health reform goals and market dynamics, each government-sponsored buy-in relies on a common set of mechanisms to lower costs and achieve savings that can be passed to consumers and/or the government: administrative efficiencies from leveraging existing public infrastructure; the presumption of reduced provider payment rates compared to commercial payment rates; increased competition in the insurance markets; and improvements to the individual market risk pool. In addition, depending on design, a buyin program may include a full or partial subsidy to further reduce consumers’ out-of-pocket costs.
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