latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/even-with-public-option-health-insurers-may-benefit-from-biden-plan-60941892 content esgSubNav
In This List

Even with public option, health insurers may benefit from Biden plan


The World's Largest P&C Insurers, 2023


The Worlds Largest Life Insurers, 2023


Essential IR Insights Newsletter Fall - 2023


Insurers get to grips with evolving net zero standards

Even with public option, health insurers may benefit from Biden plan

Former Vice President Joe Biden's healthcare plan, which has a public option, is not a step toward a single-payer system, and managed care companies may even find ways to profit if he wins the White House, according to some industry experts.

Biden's healthcare proposal would allow anyone to purchase a plan run by the federal government. That option, which the campaign has likened to Medicare, would be extended to people who are already covered by employer-provided insurance, something that is not available under the Affordable Care Act.

READ MORE: Sign up for our weekly election newsletter here, and read our latest coverage here.

A public option was included in early versions of what eventually became the ACA, but it was taken out before final passage through Congress.

Dan Mendelson, founder of consulting company Avalere Health, said the public option was of keen interest to Democrats in Congress who were on the more liberal side when the ACA was being debated. In the end, however, the House and Senate came to a compromise without the measure included, deciding that ensuring the bill would pass and coverage was expanded was more important than continuing the fight.

SNL Image

But since the ACA was signed by former President Barack Obama in 2010, public sentiment has shifted toward a second look at a public option, said Katherine Hempstead, a senior policy adviser for the Robert Wood Johnson Foundation. She said because of the sharp increase in healthcare costs, people are now looking at the public option through "a cost-containment lens," hoping for a form of rate regulation from the government.

"I think that that's the kind of thing that's more acceptable to people," Hempstead said in an interview. "They feel like it's not socialism, that it's actually just sort of leveraging some buying power for consumers."

How a new public option may materialize is still unclear because the Biden campaign has not fully defined its plan. Mendelson called that a "wise move" by the Democratic presidential nominee and said a goal of a Biden administration would be to get more people covered in light of the COVID-19 pandemic and its effect on the economy.

"I think that the sentiment is that there's a desire to have a clear and consistent benefit that individuals can access and understand, and that the government takes a more activist role in deploying that benefit," Mendelson said in an interview.

Hempstead said there is some enthusiasm for the idea of a public option as something that appeals to a broader spectrum of people, adding that it could be an opportunity to use the power of the government to negotiate on behalf of consumers.

If a Biden administration becomes a reality, Mendelson said there is "positive potential" for existing health plans, which would include coverage expansion. He said the Obama years proved that Democrats could work well with health insurers in expanding Medicare Advantage and Medicaid managed care.

"The health insurance industry would navigate the potential expansion of Medicare down to age 60 and the potential for a public option through the legislative process, where they've proven to be successful in the past," Mendelson said.

America's Health Insurance Plans, an advocacy group for healthcare companies, does not share that outlook. In an email to S&P Global Market Intelligence, AHIP spokesperson Kristine Grow said government insurance systems like the public option would "put us on a slippery slope to Medicare for All."

Grow added that such proposals do not address "out-of-control" healthcare costs and argued that Biden's plan would lead to higher taxes, higher premiums and lower quality of care.

However, Mendelson said the government taking a more active role in healthcare coverage does not mean that Biden would move the country toward a single-payer system. He said that is not Biden's policy, and there is no way that that socialized medicine would get through Congress.

"To me, that's really just a dog whistle," he said. "It's not reality. It's not what he is promising to do."