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Good Questions About the Public Option

man holding public option sign

In response to our recent post about the public option, one reader asked for some more specifics about how the public option would work.  Specifically he wanted to know:

1) How would one enroll in the PO?
2) How would premiums be determined?
3) Who’s actually eligible for coverage?
4) What would be covered – and what wouldn’t be covered, e.g., are annual or periodic examines covered?
5) What are the provider choices, i.e., can participants choose their own doctors?
6) Is there prescribed drug coverage?
7) When would it go into effect?

We figured that a lot of people might like answers to those questions, so here it goes…

First some background: Remember that the public option would be just one insurance plan offered on the new health exchanges created by the bill.  (For more background on the exchanges, check out our earlier post here.)  The exchanges would set new rules for insurance plans that individuals buy (as opposed to plans that your employer pays for)– they can’t deny coverage for pre-existing conditions, they can’t charge higher premiums for people with chronic illnesses, etc.

So really, the short answer to all of these questions (as you’ll see in a second) is that the public option would operate just like any other insurance plan available on the exchanges.

As for the nuts and bolts of the exchanges (and thus the public option), both the House and Senate bills leave many of the details to either the Secretary of Health and Human Services (HSS) or a Health Choices Commissioner who would be appointed by the President.  We’ll still try to answer these questions, but just a warning– you’re gonna catch us saying “that will be determined later” a lot.

1) How would one enroll in the PO?
You’d enroll in the Public Option the same way you’d enroll in any plan on the exchange.  The House Bill lets the Commissioner work out the actual process, but the guidelines state:

  • enrollment through means such as the mail, by telephone, electronically, and in person
  • there will be an annual open enrollment period, at least 30 days long, probably between September and November when people can by insurance through the exchange
  • there would be special enrollment periods, determined by the commissioner, for people who lose there coverage for some reason (like losing their job, losing coverage through their spouse or parents, moving somewhere outside of their plan’s coverage area)
  • there will be some kind of outreach (again determined by the commissioner) so that people who are eligible for the exchanges know they’re eligible

2) How would premiums be determined?
Like private insurance plans, the public option would be funded only by the money it collects from people enrolled in the plan, so it would determine premiums like private plans do now– accountants figure out how high the premiums need to be to cover the cost of treating its enrollees and cover its administrative costs.

Also, just like private insurance (sick of that phrase yet?), the public option would also have to follow the exchange’s new rules for premiums, which means:

  • it could not charge sicker people higher premiums
  • it could charge more for plans covering an entire family than it charges for those covering just one individual
  • it could make older people pay more, but within limits– in the House bill, plans can only charge a person twice as much based on age, in the Senate bill they can charge three times as much
  • it could charge smokers slightly more
  • it could charge more or less based on geographic area

3) Who’s actually eligible for coverage?
Anyone who’s eligible for the exchanges.  At first that would be only individuals not covered through their job and small businesses, but eventually the exchanges might be opened to everyone.

4) What would be covered – and what wouldn’t be covered, e.g., are annual or periodic examines covered?
Every plan on the exchange will have to offer an “essential benefits package.”  Again, the specific procedures haven’t been defined, but the House bill says that at a minimum all plans must cover (and the Senate bill has a similar list):

  • Hospitalization
  • Outpatient hospital and outpatient clinic services, including emergency department services.
  • Professional services of physicians and other health professionals.
  • Such services, equipment, and supplies incident to the services of a physician’s or a health professional’s delivery of care in institutional settings, physician offices, patients’ homes or place of residence, or other settings, as appropriate
  • Prescription drugs
  • Rehabilitative and habilitative (care for children born with developmental disabilities) services
  • Mental health and substance use disorder services, including behavioral health treatments
  • Preventive services, including those services recommended with a grade of A or B by the Task Force on Clinical Preventive Services and those vaccines recommended for use by the Director of the Centers for Disease Control and Prevention
  • Maternity care
  • Well-baby and well-child care and oral health, vision, and hearing services, equipment, and supplies for children under 21 years of age
  • Durable medical equipment, prosthetics, orthotics and related supplies

The public option would cover all these things.  One procedure that it could definitely not cover however, is abortion.  Private insurance plans would be allowed to cover abortion, although if the Stupak amendment is included in the final bill, it would be very, very difficult for them to do so.  More on that here.

6) What are the provider choices, i.e., can participants choose their own doctors?

Just like with private insurance companies, participants in the public option will be able to choose their own doctors from the public option’s network.  But, it’s still way to early to determine whether or not specific providers will be part of that network.  The public option will pay providers more than Medicare, but not more than the average rate paid by other plans in the exchange.  If doctors accept these rates (whatever they end up being) then they’re in.  Under the House bill, any provider participating in Medicare is automatically considered part of the PO’s network, unless they decide to opt out.

7) Is there prescribed drug coverage?

There will be prescription drug coverage.  Again, specific drugs will be determined by the HSS Secretary.

8)
When would it go into effect?
The public option would go into effect at the same time as the exchanges- in the Senate bill that’s January 1, 2013, in the House bill it’s a year later, January 1, 2014.

Conclusion
The whole discussion over the public option has gotten a little weird- with all they hype it’s getting you’d think that the public option is the biggest change from the current system.  But, it’s just one insurance plan on the new health insurance exchanges operating by the same rules as every other plan.  The biggest change from the way we do health care now– and the part you’ve probably heard the least about– is the insurance exchanges themselves, which will finally make the individual market less awful (if you’re covered through your job and haven’t tried buying insurance before, let me just say, trust me, it sucks.)

That’s not to say that the public option couldn’t turn into a big deal in the long run.  Both liberals and conservatives think that private plans won’t be able to compete with the public option- it has the potential to be way cheaper than private insurance- and both think that it might one day replace private insurance altogether.  But for now it’s just one insurance choice.

[If you’re interested in reading the bills yourself, the text of the House bill is available here and the Senate bill being debated now is here.  Or, if you don’t feel like reading 4000 pages of Congressional legislation, the Kaiser Foundation let’s you generate a helpful side-by-side comparison of the two bills here.]

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