The Medicare-X Choice Act: Reviewing the Public Health Insurance Option

The 2020 election saw an increase in candidates espousing healthcare plans that included some form of a public option. Several states (including Nevada’s interest in public health insurance options) have either implemented or investigated public health insurance options.

U.S. Senators Michael Bennet and Tim Kaine also recently got in on the act, resurrecting their 2019 bill, the Medicare-X Choice Act of 2021. Here’s a look at the history and design of this public health insurance option.


Medicare-X was first proposed by Sens. Bennet and Kaine in October of 2017. It didn’t gain much traction and languished in the Senate Finance Committee. Democrats introduced a related bill, H.R. 4094, in the House, but it met a similar fate. The bill went nowhere after being referred to the House Energy and Commerce Subcommittee on Health.

Sens. Bennet and Kaine then reintroduced the Medicare-X Choice Act in April of 2019 where it again languished in the Senate Finance Committee. Sens. Bennet and Kain tried for a third time, reintroducing the bill in February of 2021. A much different political environment exists today — including control of both legislative branches and a President amenable to the plan. Those developments make the bill less likely to die in committee this time around. That said, its passage will still be difficult.

What Is It?

At its core, the Medicare-X Choice Act of 2021 creates a public option health insurance plan that builds on both Medicare and Affordable Care Act (ACA) frameworks. The Secretary of Health and Human Services (HHS) would administer the plan and cover essential health benefits similar to other qualified health plans in state and federal exchanges. The plan would also cover primary care services without cost-sharing and initially create plans in the silver and gold tiers (learn more about ACA health insurance terminology here). Essentially, HHS would administer the public option and offer plans that compete in the ACA’s state and federal marketplaces.

The act also directs the Centers for Medicare and Medicaid Services (CMS) to study the impact of delivering additional services like long-term services and support, assistive and enabling technologies, and vision, hearing, and dental services to determine the impact of those additional services.


Because the plan aims to improve choice while increasing competition, it would be phased in over a period of time. Initially, the public plan would be available in areas with one or fewer options on the federal or state-based exchanges. The plan would then be gradually rolled out over four years, beginning in areas with high-cost plans and those with fewer plans. Eventually, it would cover the entirety of the United States.


The plan has several features designed to reduce the costs of health insurance and care. First, it extends eligibility for the premium tax credit to those at and above 400% of the federal poverty level (FPL) and limits individuals to paying 8.5% of their income in premiums. It would lower that threshold for those below 400% of the FPL. It would also fix the so-called family glitch by using the cost of a family plan to determine if an employee with access to insurance at work has affordable coverage, potentially offering tax credits to those who aren’t eligible for them today.

The plan would also create a national reinsurance program with funding levels at $10 billion per year to cover high-cost patients. State exchanges have implemented similar reinsurance programs which have helped lower premium costs.

Finally, the bill aims to lower prescription drug costs by enabling the HHS Secretary to negotiate drug prices.


The bill would force providers who participate in Medicare or Medicaid to accept Medicare-X plan patients. HHS could also enroll other providers specifically for the plan. Providers would be reimbursed at Medicare rates. However, they could earn reimbursements of up to 150% of Medicare rates if they’re located in rural areas.

Other Features

The bill gives HHS authority to use outcome-based payment models and create a grant program for experimentation. It would also authorize $50 million to the Department of Justice Antitrust Division and $100 million for the Federal Trade Commission for five years. Those funds would be used to investigate health care markets for anti-competitive practices.

Potential Impact

In early 2019 the American Hospital Association and Federation of American Hospitals released a study by KNG Health Consulting that found:

  1. The public option would experience enrollment approaching 41 million in 2024. About 5.5 million currently uninsured would gain insurance under the plan. The remainder would come from the individual market or the employer-sponsored market. In fact, the study estimated that 15% of the employer market would transition to the plan.
  2. The plan would reduce health care spending by 7% because provider payments would occur at Medicare levels instead of insurer levels.
  3. Hospitals would suffer, accounting for 67% of the payment reduction even though they’re about 47% of the current spend.

Hospital trade organizations funded the report, so it doesn’t measure the impact on consumers.

Democrats will likely continue to push healthcare reform while being opposed by Republicans. However, Medicare-X has a good chance of being the next iteration of health insurance. Its cost is relatively low compared to alternative plans, it fits into the existing Medicare and ACA structure and it promotes choice and competition, unlike single-payer solutions.

Certifi helps private and public health insurance exchanges improve enrollment and build a better member experience with health insurance exchange consolidated billing and payment solutions.


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