Senate Democrats want more information on how to enact private health insurance reforms, including feedback on establishing a federal public option.
The 86-page RFI, published July 30, asks stakeholders and policy experts for their input on dozens of potential policy changes aimed at lowering costs and expanding coverage, all with the intention to inform future legislation rather than proposing a bill.
The latest reform push builds on a March “Dear Colleague” letter that Senate Finance Committee Ranking Member Ron Wyden and 11 co-signers used to lay out an insurance reform agenda. Since then, committee Democratic staff have held more than 80 listening sessions with nearly 250 patient advocates, consumer groups, researchers, hospitals, providers and health plans.
“At a time when the American people are more dissatisfied with their health insurance than they have been in 20 years, Democrats have an obligation to take bold, meaningful action to fix America’s broken for-profit private health insurance system,” Sen. Wyden wrote.
The document noted the expiration of enhanced ACA premium tax credits at the end of 2025, which has lead to a sharp premium increases and enrollment declines nationwide. It also pointed to Medicaid and marketplace cuts within H.R.1 that the CBO projects will leave 15 million more people uninsured over the next decade.
What might a public option entail?
A public option is a government-administered or sponsored health insurance plan offered alongside private plans. The RFI is explicit that such a plan would compete with private insurers rather than replace them, with the goal of increasing competition and lowering premiums in concentrated markets.
The RFI raises the design questions a federal public option would have to answer, including how the plan is administered and who bears the risk, what services are covered, how premiums and cost-sharing are set, how networks and payment rates are established, which markets the plan is sold in, and who is eligible to enroll.
Lawmakers specifically want feedback on three potential approaches: giving the HHS secretary authority to negotiate rates, benchmarking payments to Medicare, or having CMS set annual rates through a public option fee schedule modeled on traditional Medicare. It notes that a public option running on CMS infrastructure could cut administrative costs by eliminating practices such as prior authorization and improper claims denials.
Three states have already done it
Three states’ already existing public options serve as a testing ground for a national model, with the RFI noting that decisions on administration, provider participation and reimbursement rates determine whether the plans attract enrollment and lower costs.
Washington launched “Cascade Select” plans in 2019, which are policies run by private insurers but that cap payment rates to providers at 160% of Medicar. Hospitals in the state are required to contract with at least one plan. The RFI notes the plans have struggled to build broad networks and have not met initial premium reduction targets.
Colorado required private insurers to offer the “Colorado Option” beginning in 2023. The state doesn’t set rates directly but requires insurers to negotiate with providers, with state payment floors as a backstop. Enrollment has grown steadily, though the plan has also not met its premium reduction targets.
Nevada introduced a public option for plan year 2026 that leans on the state’s Medicaid infrastructure and requires managed care organizations to bid to administer plans. More than 10,000 people have enrolled so far.
The employer market is also in play
The RFI asks whether a standardized enrollment platform could reduce administrative burden for employers and workers, noting that the market hasn’t seen meaningful reform in decades. It also seeks feedback on eliminating the ACA “firewall,” which prevents workers with access to job-based coverage deemed affordable under federal rules from receiving marketplace subsidies, even when that coverage is unaffordable in practice. And it raises the prospect of employers contributing toward a public option as a coverage choice for their workers.
You can read the full RFI here.
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