Public Option Revived

State-run insurance

In September 2009 President Obama pitched the Affordable Care Act to the nation by lamenting that "in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company." The result, he said, was more expensive insurance and lower-quality coverage; Obamacare would solve this problem by creating insurance exchanges that would be attractive to insurers, thus giving people more options.

In 2016, Obamacare is the law of the land, and in several exchanges, the number of insurers is dwindling. In April, after months of warnings, UnitedHealth, the nation's largest health insurer, announced it would pull out of most of the state exchanges where it had been operating. Weeks later, Humana announced it was quitting the exchanges in Alabama and Virginia.

Consequently, a report by the Kaiser Family Foundation found that some 650 rural counties in Kentucky, Tennessee, Mississippi, Arizona, Oklahoma, and elsewhere were likely to have just one carrier next year. In Wyoming, Alaska, and Alabama, the exchanges will feature no competition anywhere in the state.

In a July article for the Journal of the American Medical Association, President Obama proposed addressing this issue by creating a government-run insurance plan—the "public option"—to be sold alongside private health plans.

But the health law already tried a nonprofit substitute for the public option: co-ops. Most of these have already failed, and more are likely to shut down in the future, leaving taxpayers on the hook for billions of dollars in federally backed loans. Now the president wants more government intervention into a problem Obamacare failed to solve.