A Framework for Public Option Implementation

Designing a public option program will require states to address a range of issues, such as the administration and financing of the program as well as the design of its benefit package. Here we outline a series of questions and policy options for states to consider as they undertake the development of such a program. This policy decision tree is intended to provide states with a detailed blueprint for weighing the various factors and considerations involved with developing legislation authorizing a public option program and the ensuing regulatory implementation process.

The policy decision tree is designed around the following key assumptions:

The state has executed an environmental scan of its current health insurance market, including the status of coverage (including portion of uninsured individuals), health care costs (including provider payment rates, premiums, and out-of-pocket costs), level of competition in the health care marketplace, and adequacy of provider networks;
The state has cultivated an understanding of the underlying problems it seeks to resolve with the introduction of a public option program into the market; and
The state has begun convening stakeholders and thought leaders to discuss the goals of the public option program and how it could be designed to address the identified challenges in the market.

Throughout this document, we reference efforts by Washington State and Colorado to establish a public option program because they are the leading examples of state initiatives in this arena. Although the prime sponsors of the Colorado Affordable Health Care Option Act withdrew their bill for the 2020 session in light of the coronavirus pandemic, the authorizing legislation, as well as the state’s process to collect feedback from stakeholders to inform the program’s design, offer lessons learned that may be helpful for other states.

The full framework can be downloaded here.