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America’s next big healthcare reform might already be underway

Colorado found a way to make health care cheaper. Other states are paying attention.

If you live in Colorado and buy your own health insurance, there’s a good chance you’re one of the 139,000 people enrolled in a public plan crafted by your state leaders. You’re paying $0 for primary care visits and certain mental health visits, $0 for prenatal and postnatal care, and you don’t have to meet your deductible first.

On average, enrollees in these plans pay an estimated $14 to $33 less a month in premiums than people in comparable plans, and their annual out-of-pocket spending has fallen about 15 percent while holding steady for everyone else on the marketplace.

Colorado didn’t build a government insurance company, rather, it designed the plan itself, down to the copays, and then required private insurers to sell it alongside their own.

A public health insurance option was supposed to be part of the Affordable Care Act. President Barack Obama supported the idea throughout his time in office, endorsing a government plan that could, in his words, “keep insurance companies honest” by giving them a government-backed competitor. But the idea was stripped from the bill before passage, after it became clear Senate leaders couldn’t get garner enough votes. Joe Biden campaigned for president on reviving a public option in 2020, but he never prioritized it once in office, and the progressive activists who championed it under Obama largely turned their sights to single-payer health care, which would cover all Americans.

Three states built a public option while Congress stalled. In Colorado it’s now half the individual market.

It worked by forcing hospitals to charge less, not by the government selling insurance.

Whether it spreads depends on Medicaid cuts — states won’t pick two fights at once.

The problems a public option was intended to address — access, costs, reliability — have still not gone away and a growing number of policy wonks and elected officials have started to ask if the idea deserves a spot again on the national agenda.

Healthcare costs are soaring, and voters tell pollsters it’s among their top economic concerns. Medicaid work requirements are set to take effect in January, which could leave millions of low-income Americans uncovered, and private insurers have asked to raise ACA marketplace premiums by a median of 15 percent next year, after a roughly 20 percent hike in 2026. Two-thirds of adults say they favor a national government health plan, and polls suggest most voters imagine proposals like Medicare-for-all as a competitor to private insurance, rather than a systemwide replacement.

While the debate around public options stalled in Congress, three states have gone ahead and built their own. Washington state launched a public option in 2021, Colorado in 2023, and Nevada earlier this year. They all built on a provision of the Affordable Care Act that lets states apply to run their own version of the law — one Sen. Bernie Sanders fought for in the hopes that Vermont would use it to build a single-payer system.

Their experience also shows the challenges involved: Not only in overcoming political objections from competing insurers, but medical providers as well, who may have to accept lower payments in order to keep the public option’s premiums affordable.

Colorado leaders say this push to control costs was critical to their success.

“The driving point behind what we were doing was to set hospital prices,” said Michael Conway, Colorado’s insurance commissioner and an architect behind the program. “That was what we were driving towards and that’s what we did.”

It’s not clear if other states, or the federal government, will be willing to pick those kinds of fights with the broader medical industry. But if ever there was a time for it to happen it would be now, with affordability a massive political issue, and the public seemingly eager for serious action on health care. Just as the ACA began with a state-level experiment in Massachusetts, the success or failure of these early public-option states could presage much bigger changes........

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