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WASHINGTON — When it comes to health care, every Democrat running for president falls into one of two camps: those who want to put all Americans under a single-payer "Medicare for All" plan, and those who would instead offer a "public option" that competes with private insurance.
So far the debate among candidates has largely been about which path to pursue. But just as important, and far less discussed, is just how massive the differences are among Democrats who favor a public option.
Some are calling for changes so modest that few Americans — by design — would notice they had happened at all. Others are calling for an overhaul so sweeping that they might lead — by design — to something resembling Medicare for All. Many of the candidates have co-sponsored multiple bills with different approaches, while others have left their stance ambiguous.
Here’s a run-through of how some of the different proposals work and the kind of choices Democrats will need to make if they go the public option route.
Who would get covered?
One fundamental divide is who will be served by a public option. Is it a last resort for people who can’t get insurance elsewhere? Or is it a potential first choice for everyone?
On the “last resort” end of the spectrum is Sen. Michael Bennet, D-Colo., who is running on a bill called “The Medicare-X Choice Act” that he co-authored with Sen. Tim Kaine, D-Va.
The bill would create a new “Medicare-X” plan to be sold on the Affordable Care Act's exchanges, a marketplace for plans that provides subsidies to customers who don't get comprehensive insurance through their work. It would start out in rural areas with few private plans and then spread nationwide over several years. Small businesses could eventually buy “Medicare-X” for their workers as well.
"It's really focused on filling in the gaps that exist," Bennet told NBC News in an interview.
Biden’s new public option plan is similar in this regard. It would be available to individuals who buy coverage through the Affordable Care Act’s marketplace and give people on employer plans more flexibility to switch to a public option.
On the opposite end of the spectrum is “Medicare for America,” a bill by Reps. Rosa DeLauro, D-Conn., and Jan Schakowsky, D-Ill. Former Rep. Beto O’Rourke, D-Texas, has embraced their legislation on the campaign trail while the Center for American Progress, an influential liberal think tank, has promoted a broadly similar plan.
Under Medicare for America, a new Medicare plan with more generous benefits than the existing program would become the first option for insurance. Americans would be automatically enrolled over time and have to affirmatively opt out to purchase private coverage.
Businesses of all sizes would have the option to cover their workers through Medicare. In addition, large portions of the current health care system — including existing Medicare recipients — would move to the new plan.
That's too much for Bennet, who sees it as taking too many parts of the system and "shoving them together into a new bureaucracy." But to supporters, the plan's reach ensures fewer people are left behind and gives more leverage to change the system.
Some candidates, like Mayor Pete Buttigieg of South Bend, Indiana, have said they envision a public option as a pathway to Medicare for All. The DeLauro-Schakowsky bill gives an idea of what that might look like.
What would a “public option” look like?
Depending on the plan, your "public option" might look very different.
In some cases, you’d be joining an existing government program. Sen. Amy Klobuchar, D-Minn., has campaigned on a bill she co-sponsors with several other 2020 contenders that would allow Americans over 50 to buy into traditional Medicare. A number of presidential candidates also co-sponsor a bill by Sen. Brian Schatz, D-Hawaii, that would allow people to potentially buy into a state Medicaid plan.
But in other plans, what you’d be getting would not be quite the same as Medicare or Medicaid as it exists today. Medicare Part B also has no limit on out-of-pocket spending, which is why seniors often purchase supplemental insurance or a private Medicare Advantage plan that caps expenses.
In the case of Bennet, the new “Medicare-X” plan would more closely resemble the private plans offered through the ACA, which have to cover a minimum set of benefits and have maximum deductibles and out-of-pocket costs. The DeLauro-Schakowsky bill’s Medicare option would go further and cover new benefits as well, including dental, vision and long-term care. Biden’s plan doesn’t fully describe how the new public option would be designed.
But there would still be big differences. The main public option proposals would require doctors who accept Medicare patients to also take the new plans as well. Customers would likely be able to access wider networks and be less vulnerable to surprise bills.
"That's really different from private coverage today," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation. "We’re all in and out of network depending on what goes on."
How much would you pay? And how much would it cost?
Here’s something you might not know about a public option: On paper, it actually saves the government money (we’ll get into why in a second). The nonpartisan Congressional Budget Office estimated one version of a public option would save $138 billion over 10 years.
But the Biden plan that came out this week costs $750 billion over the same period, according to the campaign. Why the big difference? Like most of the public option proposals, it doesn’t just create a public plan, it also offers new subsidies to help people pay for it.
“If you’re thinking about how much a public option will expand coverage, the action there is on the subsidy,” Matthew Fiedler, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy, said.
In Biden’s case, his plan would boost aid for people with higher incomes who are currently ineligible for benefits and cap maximum premiums at 8.5 percent of annual income. He also would offer low-income customers in states that have not expanded Medicaid the chance to buy a public option plan with zero premiums. Finally, his plan would boost the ACA's tax credits to help customers buy a more generous plan — private or public — that covers a higher percentage of their out-of-pocket costs.
The Bennet bill would expand subsidies to a lesser degree, allowing higher income customers to access them and capping premiums at 13 percent of income. The DeLauro-Schakowsky bill would cap premiums at 8 percent of income, offer zero-premium plans with no-cost sharing to low-income Americans, and cap out-of-pocket costs at $3,500 for individuals and $5,000 for families, lower than the current limits of $7,900 and $15,800 for ACA plans.
The scale of each plan's benefits is a major factor in how much they cost the government. Bennet's bill counts on the savings from the public option to pay for the increase in subsidies. Biden's plan, with its more generous aid, calls for new taxes on investments and income from high earners to make up the difference.
While there’s no estimate of the DeLauro-Schakowsky bill's total cost, experts who talked to NBC News expect it to be far more expensive, in part because it expands benefits for existing Medicare recipients. Its authors propose financing it by ending President Donald Trump's tax cuts and imposing new taxes on higher incomes and investments.
How much would doctors get paid?
Perhaps what distinguishes a public option from private insurance the most is how it would pay doctors and hospitals. This sounds like a wonky technical concern, but it’s critical to understanding how they would function.
The way a public option saves money is by reimbursing providers at rates closer to Medicare, which are far lower than what private insurance tends to pay. One study of hospital systems by the RAND Corporation found they charged private plans more than twice as much on average as they did Medicare.
By paying lower rates, a public option would be able to lower premiums, which would mean fewer government subsidies to help people afford them. It also would put more pressure on private insurers to lower their premiums and give them more leverage to negotiate lower rates themselves.
A coalition of trade groups representing different parts of the health care industry oppose a public option in part for this reason, arguing they need the higher private insurance rates to make up for the lower ones they receive for Medicare.
The United States spends far more on health care per person than other developed countries and experts tend to agree there’s room to close that gap at least somewhat without worsening care. But how much is still an open question.
The various public option plans try to deal with this issue in different ways. Bennet’s “Medicare-X” plan would pay the same rates as Medicare, but they could be boosted as much as 25 percent for rural areas where costs tend to be higher. The DeLauro-Schakowsky bill boosts Medicare reimbursement by 10 percent or more for hospitals. The Schatz Medicaid buy-in raises the reimbursement rate for Medicaid, which is lower than Medicare. The Biden plan is less clear, only saying it would negotiate lower rates.
Gov. Jay Inslee of Washington, another 2020 candidate, recently signed a bill creating a public option that set reimbursement rates at 160 percent of Medicare in the face of industry opposition to deeper cuts. A new Democratic president and Congress would face even more outside pressure, but any boost in the rates would also raise premiums and taxpayer costs.