Sep 25, 2019

How a "public option" could benefit employees

Caitlin Owens, author of Vitals
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Data: The Commonwealth Fund; Chart: Axios Visuals

Democratic presidential candidates' proposed changes to the Affordable Care Act could be a particularly big relief to low-wage workers.

Between the lines: These effects would be especially noticeable in some politically important states — including Florida, North Carolina and Texas.

How it works: In addition to creating a public insurance option, former Vice President Joe Biden and South Bend, Indiana Mayor Pete Buttigieg have proposed changes to the ACA's system of subsidies.

  • Today, those subsidies aren't available to people who have the option of getting coverage through their jobs, and the least generous subsidy caps a person's premiums at 9.9% of their income.
  • Biden and Buttigieg would require that no one pays more than 8.5% of their income on premiums, and they'd let people forego employer insurance and get coverage through the exchange — or at least through the public option.
  • They'd also peg those subsidies to more generous policies with lower deductibles.

And a public plan would likely be cheaper than most private coverage, creating a more affordable option and, supporters argue, bringing down prices throughout the market.

What they're saying: Many low- and moderate-income workers would likely choose those options, said Matthew Fiedler of the Brookings Institution, because premiums for employer insurance often eat up more than 10% of poorer workers' incomes.

Employers — especially in low-wage, high-turnover industries — could also end up benefitting.

  • "Many employers would undoubtedly like to be out of the health insurance business if they could be guaranteed their employees could find comparable affordable coverage elsewhere," Avalere consultant Chris Sloan said.

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