Reps. Jan Schakowsky (D-IL), Lynn Woolsey (D-CA), and Pete Stark (D-CA) today announced introduction of H.R. 5808, the Public Option Act. The bill, introduced with 128 original co-sponsors, would establish a public health insurance option that would compete with private insurers in the Health Insurance Exchanges created by the Affordable Care Act. It would have to meet all the rules established for private Exchange plans, including benefit and cost-sharing levels, provider network adequacy, and consumer protections.  

According to analysis by the non-partisan Congressional Budget Office (CBO), the bill would save $68 billion from 2014 (the first year it would be available) through 2020. CBO also estimates that the public option would have, on average, premiums 5 – 7 % lower than private plans in the Exchanges.  

“As one of 18 members of the President’s National Commission on Fiscal Responsibility and Reform, I am charged with looking for ways to reduce the federal deficits,” said Rep. Schakowsky. “The nonpartisan CBO estimated that the public option would significantly trim federal spending. And by providing more choice, a public option would also make health care better and more affordable. Just this week, UnitedHealth Group — the country’s largest managed care company — posted a 31% increase in second quarter net income while spending more on administrative costs and less on medical care.  If a less expensive public option were available, UnitedHealth Group would face real competition, forcing them to think twice about charging excessive rates, and driving down costs.”  

In the first three years of a public option, payment rates would be based on Medicare Parts A and B rates, though payments for physicians would be 5% greater.  Prescription drug rates would be negotiated by the Secretary of Health and Human Services, who would also set rates for any new benefits, like well-child visits, not provided in Medicare. After 2017, the Secretary would set rates with the goal of ensuring access, affordability and value, and would maintain the doctor payment rate of “Medicare + 5%.”