Opt-Out Public Option Proceeds in Senate

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Senate Majority Leader Harry Reid announced today that the Senate version of the health reform bill will include an opt-out. This will allow states that want to hurt their constituents and deny them access to health care to reject participation in the national public option.

The opt-out clause should be of some concern to folks like us living in Red States. Republicans in the House and Senate are almost unilaterally opposed to any sort of health insurance reform, choosing to stick up for the insurance companies instead of the 46 million uninsured Americans.

Texas has the highest rate of uninsured residents in the country, as the chart at right demonstrates. Between 2007 and 2008, 9.3 million Texans were uninsured for part or all of the year. It is imperative that Texans have access to real insurance, in order to receive the care they need.

Here are some early specifics about how the opt-out would work, should it make the final bill signed by President Obama. In his press conference, Harry Reid said that states could not opt out before 2014. (Yes, it's a crappy transcript, but that's the best link I can dig up right now.)

  • 2011-2012: National insurance exchange is phased in; consumer reforms begin taking effect.
  • 2013: Public Option goes into effect. Americans are mandated to have insurance coverage.
  • 2014: States can opt out, exact process to be determined.

Apparently, the opt-out will require a 2/3 vote of the state legislature, with the governor able to veto an opt-out. We don't have a link for this yet, but that's what folks close to the process are suggesting to Burnt Orange Report.

Under this scenario, Texans would be able to participate in the public option (if they qualify) in 2013. Legislatures would then have to intentionally deny their constituents insurance by opting them out of the public option.

Importantly, states CANNOT opt out of the consumer reforms that will lower costs, prevent rescission, and stop insurers from denying you coverage for a pre-existing condition. These reforms are huge in making the insurance companies work harder to provide care, rather than just pile up profits.

Other questions that need to be resolved as we work through the sausage-making process:

  • As governorships and legislative control pass between the two parties, can states opt out later on?
  • Can a state opt in if it previously opted out?
  • Are there different processes for states with unicameral and/or bicameral legislatures?
  • Can states pro-actively pass legislation to opt out before 2014?

Access to the public option is key to creating real competition with the private insurance companies in terms of lower premiums and better quality of care. Any state that does not have the public option will see its constituents paying more for care than their neighbors across state lines. Texans need real reform, and deserve the choice of a public option. Now, let's make sure that our Legislature knows it.

Update 4:26 p.m. — Rep. Garnet Coleman released the following statement on Sen. Harry Reid's press conference today:

Today, Senator Reid presented a bill that includes a public option, something the American people overwhelmingly support.  I commend the Senators for their tireless efforts, and for pushing legislation that will significantly help people in America, and Texas in particular.

The Senate bill includes a provision for states to opt out of the public option.  A public option will increase competition and provide more quality, affordable options for middle-income Texans and Americans.  

All the more reason we need to make sure Texas stays opted in to the public option.


About Author

Katherine Haenschen

Katherine Haenschen is a PhD candidate at the University of Texas, where she studies political participation on digital media. She previously managed successful candidate, issue, voter registration, and GOTV campaigns in Central Texas. She is also a fan of UCONN women's basketball and breakfast tacos.


  1. Forcing legislature to vote to deny coverage is a good provision

    Legislatures would then have to intentionally deny their constituents insurance by opting them out of the public option.

    Having to go on record as voting to deny their constituents health insurance should give even the most die-hard opponents of reform in the Texas state legislature pause.  

    • Indeed
      Plus, it appears that opting out would transfer a large portion of the health insurance burden back onto small businesses.

      We need the public option both to ensure that people are covered and to provide some separation between the cost of health insurance and the cost of labor, including non-employee COBRA costs.

  2. Likely an uphill battle but depends on details
    To get a sense of how this might be received by the Gov and Lege, you'd want to look at which companies currently serve the non-group market in TX as well as consider potential entrants into that market, and see where their political connections are.

    One thing that I have wondered about with public option over the past several months is whether and how the administration of a public option might be contracted out. Medicare and Medicaid both contract out some administrative functions (and in the case of Medicare Advantage and Medicaid managed care programs, they contract out pretty much everything). So it isn't out of the realm of possibility that the public option will have some admin functions contracted out. If that's the case, the political calculus of a state-level opt out will be completely different — particularly if the contracting will be done at a state or regional level. You might very well attract some players that don't otherwise serve the individual market. I don't know whether and to what extent this has been discussed, but I haven't seen anything so far that would rule it out.

  3. Opt-In is Wonderful!, Co-Op is Not Bad
    Opt-in is a wonderful test to apply to all Democrats on the primary ballot. I will try to get it as a referendum item on the ballot and force declarations on each and every Democratic legislator.

    Co-op is actually not a bad idea for a modern economy. This is what they have had in in WA and Northern California since WWII. It is what we would have had in Texas a century ago were it not for WWI and the 1920's “Red Scare” ginned- up by racists and reactionaries in the Democratic Party.

    Co-op is hard for it involves rational, disciplined, and professional medical and health care. There is no billing or claims nonsense at all. But, it would end our class- and race-based system of proprietary, pseudo-charity, and government clincs and hospitals through market choices, not through collusive bargaining and government diktat.

    I expect Democrats will be amazed at who has a vested interest in the status quo — for instance, the notoriously high-cost, poor quality proprietary hospital and clinics in McAllen, Texas.

    Republicans should be thoroughly confused and bewildered by a hysterical combination of Red Scare and Mediscare designed to limit their choices.  

    • Careful —
      Opt-OUT and Opt-IN are two very different policy proposals.

      Opt-OUT means every state starts with the ability to get the public option and legislatures must choose to kick them out by opting out as a state.

      Opt-IN means every state starts outside of the public option and must pro-actively join.

      Opt-OUT means we at least have a chance to start insured, then watch as our state government kills our coverage. Opt-IN means we never got it in the first place.

  4. Not afraid of opt-out in Texas…
    as long as it's a matter of legislative vote (as opposed to Governor having direct role to make an executive decision).   Since most state candidates for opting out are Republican led states, I doubt the final bill will give Governors the sole authority.

    A solid Democratic legislative delegation in the House and Senate can block a legislative opt out.

    It's time to start getting commitments on this from legislative candidates…and keep it up.   The timeline for opting-out votes looks like it might be AFTER the 2012 election, but we should start now and keep a very public list of those with us and those against us.

  5. This makes me very happy
    Now, we just need to get Perry and Hutchison out of the way. It would also be nice if more Democrats here in Texas came out and supported this.

    I do.

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