Although a public option could help fill the void left by insurers exiting state health exchanges and drive down healthcare costs, government run plans could eventually eliminate private insurers from offering exchange plans altogether.
Incorporating a public option into the ACA marketplace would likely pave the way for a full-fledged Medicare-for-all policy, writes Noah Smith in an op-ed for Bloomberg. Private insurers would likely be relegated to specialized health plans since the government could use its negotiating power to drive down costs without worrying about turning a profit.
That shift to a Medicare-for-all policy would mean higher taxes for small businesses that could no longer claim a tax credit for employer-sponsored health plans, and could ultimately lead to higher healthcare costs without competition from private insurers. But ultimately, Smith points to other developed countries that have successfully implemented nationalized healthcare programs as a promising sign a policy shift is not as scary as it appears.
Both President Barack Obama and Democratic presidential nominee Hillary Clinton have thrown their support behind a public option. Clinton has also voiced support for a Medicare buy-in option for seniors over 50. Provider associations, on the other hand, have expressed concern that government-run plans will suppress insurer payments.