An Alternative to a Public Option

Before the Trump administration adopted policies undermining the Affordable Care Act, the ACA's marketplaces were working well where there was competition, but faced high and rapidly increasing premiums in areas with only one or two insurers or a limited number of providers. Without significant competition, insurers have little incentive to negotiate lower payment rates for hospitals and doctors, and when a provider system is essentially a monopoly in a region, even a well-motivated, dominant insurer has little negotiating leverage. One answer some people have suggested for these problems of high premiums and concentrated market power is to create a public option—a government-run plan to compete with private insurers. We suggest a simpler and more politically feasible approach that has had a record of success and bipartisan support in the Medicare program.