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    • Dr. Thomas Rice, Opinion Piece
      Dr. Thomas Rice, Opinion Piece

Opinion Piece: "Why the Biden Administration Should Help States Develop Capitated Public Options"

In an opinion piece published in the December edition of the Milbank Quarterly, Thomas Rice, UCLA Fielding School of Public Health professor of health policy and management, and co-author Richard M. Scheffler, University of California, Berkeley, distinguished professor of health economics and public policy, shared their perspective on capitated public options

Thursday, December 17, 2020

President-elect Joe Biden has proposed a federal public option similar to Medicare as the centerpiece of his health policy agenda, though the details regarding the fundamental design of the plan remain unclear. Questions regarding how it will work, who will qualify for it, and how providers will be reimbursed are yet to be answered. Most fundamental, perhaps, is whether eligibility will be confined to the Affordable Care Act (ACA) marketplaces or also granted to those with employer-based coverage and/or low-income persons living in states that have not expanded Medicaid. The Biden-Sanders Unity Task Force calls for all Americans to have a public option available, but this may complicate passage by Congress.

Overall, 70% of the public supports a public option, with 90% of Democrats, 74% of Independents, and 40% of Republicans in favor. However, even if Democrats win both Senate seats in Georgia, resistance from Congressional Republicans, moderate Democrats, as well as the insurance, hospital, and physician lobbies make it unlikely that the plan will pass in the early part of Biden’s first term. It is more likely that the administration will move on expanding subsidies in the ACA marketplaces or potentially more bipartisan issues, such as ending surprise billing, augmenting price transparency, and controlling pharmaceutical prices. In this scenario, the administration may consider turning toward the states as “laboratories of democracy” to test and prove the viability and efficacy of a public option.

To examine this possibility, we begin by assessing two states that have made recent efforts to develop quasi-public options. Then we propose using risk-based capitation, discuss its advantages, and identify key states that might pursue a public option. Finally, we conclude with a review of what the Biden administration and the Secretary of Health and Human Services nominee, Xavier Becerra, can do to support state public option programs.