State Public Health Insurance Option: Advancing Equitable, Affordable, and Dependable Coverage

COVID-19 has shined a light on our society’s most broken parts, including a health system that is cracking under the pressure and the persistence of deep and structural racial inequities. These gaps in outcomes did not begin with COVID-19 but rather reflect longstanding health disparities across the health care system. For example, African Americans are more likely to die at early ages from all causes. Black, American Indian, and Alaska Native women are two to three times more likely to die from pregnancy-related causes than white women.

These disparities, among others, resulted in COVID disproportionately impacting LGBTQ people and communities of color, with American Indian, Alaska Native, and Black individuals five times more likely, and Hispanic individuals four times more likely, to be hospitalized for COVID-19 than non-Hispanic Whites.

As the research makes clear, health coverage affects whether a person can get health care, when they can get that care, and ultimately how it affects their overall health. Affordability and access to care are core to good health and more important than ever during the pandemic. In the past year, millions of people have either lost their health care coverage (due to job loss) – or face challenges even affording their current coverage. The erosion of insurance coverage is not entirely new but a continuation of a trend that predated the pandemic, which has resulted in significant job loss and disruptions in insurance coverage. Also problematic is that the burden does not fall equally across populations; Black, Hispanic, AI/AN, Native Hawaiian, and other Pacific Islander people are uninsured at higher rates than whites.

What’s clear is that health care costs have become too expensive for too many Americans and a leading reason Americans go into debt or file for bankruptcy. Even though the Affordable Care Act has helped narrow gaps, people who are Hispanic and Black, for example, are still more likely than people who are whites to report cost-related barriers to access care. Simultaneously, people of color are also less likely to visit a doctor or other health providers when sick.

As the nation and the world have grappled over the past year with the pandemic, Americans feel that the time is right to fix our health care system’s flaws. One of the most resounding findings in our recent public opinion research is that Americans want action on health care now. Nearly all Americans (84%) agree we must build a better, more equitable health care system in the wake of the pandemic. This sentiment cuts across the political spectrum, with 71% of Republicans and 93% of Democrats calling for solutions. Black Americans, whose communities have been especially hard hit by the pandemic, agree strongly as well—at 94%. The message could not be more clear for policymakers: The time to take action and respond to this need is now.

In response to this urgent need for change, leaders in several states have been actively exploring new ways to expand and leverage public coverage sources as a way to create additional choices for their residents. A public health insurance option, or “public option,” is a government-regulated insurance plan that is often privately-run and made available to individuals, small businesses, and nonprofit organizations. They provide an alternative (typically at a lower cost) to a traditional private insurance plan. Public option plans improve the health care system by adding more competition, lowering costs, and making quality health care more accessible. Providing people with more affordable insurance options is especially helpful in states served by few carriers.

Some critics have argued that public option proposals will exacerbate health disparities and hurt communities of color. But this misrepresents how a public option would work and, similarly, ignores the fact that state policymakers can use the savings from a public option to better advance health equity and promote access to affordable health insurance and care for everyone, including people of color. States have options for promoting health equity within their public option design proposals, including by:

• Ensuring those currently left behind have access to coverage: States can create avenues to affordable coverage for those who are currently limited from purchasing coverage on a state’s Marketplace. This can be done by offering coverage off the exchange, as Colorado included in their proposed public option legislation in 2020 and Connecticut included in this year’s legislation.
• Engaging diverse perspectives: States can require inclusion of voices and perspectives of people underserved by the current health care system in board membership, advisory or other governing committees that are charged with helping to build public options. Embedding these perspectives within a program or benefit design will best meet unmet needs.
• Ensuring there is robust program evaluation and data collection: States can include requirements for data collection by race and ethnicity and evaluation and analysis of the effectiveness of public options at driving down disparities and improving access to affordable health care.

A public option can also be combined with and complement other policies that help address inequities.

• Provide additional financial assistance: Other reforms can include providing additional subsidies to make it an even more affordable and accessible option for people who would not otherwise be able to afford coverage, as Connecticut has proposed. This can also be used to drive down people’s out of pocket costs in addition to premiums, which we know are a barrier to affordable care for people of color. For example, a public option could include standardized benefit designs that prioritize low- or no-cost sharing for services and treatments disproportionately needed by people of color, such as doula services to help close the disparities women of color experience in pregnancy and maternal health.
• Align and expand promising approaches to existing programs: A public option provides another avenue for states to align and expand existing efforts – such as those utilized within their Medicaid programs – to people who may not otherwise benefit. For example, many states already include provisions in their Medicaid managed care contracts that address health equity and social determinants of health, which they could choose to adjust and/or expand to in state options. For states without Medicaid managed care programs, these contracting approaches can be applied to public option benefits and networks by intentionally addressing specific gaps in access and affordability to services and treatment among people of color.

It is important to remember that states exploring the creation of public options are building on other programs that have also meaningfully moved the needle on improving access to health care. The availability of programs – such as Medicaid, Medicaid expansion, and financial assistance for marketplace coverage – has laid a foundation to expand on to make health care truly accessible for people currently left behind. In Connecticut, for instance, further expansion of critically-important safety net programs is included in the legislation that would create the state’s public option – creating a more comprehensive and equitable response to the issues Connecticut residents face.

Support for state public health insurance options cut across demographics, with nearly 7 in 10 voters nationally supportive of the concept. In Connecticut and Colorado – two states considering public option proposals this year – support is exceptionally high among groups that often experience barriers in facing access to care, such as younger voters and people of color.

In the wake of the pandemic, public options are one solution that can bring people together across party lines and demographics. By creating public options, state policymakers arm themselves with new tools and intentional planning to address systemic health inequities in their state. All while adding a new, more affordable coverage choice to address the soaring health care costs that negatively impact far too many lives.