Universal Healthcare Experiments at the State Level

The cost of healthcare in the United States remains a massive financial burden for millions of families. Frustrated by federal delays and rising premiums, several state governments are taking matters into their own hands. States like Washington and Colorado are pioneering affordable public option health plans to lower costs and expand coverage.

What is a State-Level Public Option?

When people hear “universal healthcare,” they often think of a single-payer system where the government is the only health insurance provider. However, states are taking a different approach known as a public option.

In a public option system, the state government designs a standardized health insurance plan with strict rules on out-of-pocket costs and provider payments. Private insurance companies then sell and manage these state-designed plans on the open exchange market.

This model introduces a highly regulated, affordable choice that competes directly with standard private insurance plans. The goal is to drive down prices across the entire market by forcing private companies to compete with the state’s affordable standard.

Washington: The Pioneer of Cascade Care

In 2019, Washington became the first state in the nation to pass a public option law. The state officially launched its program, known as Cascade Care, in 2021. Residents can purchase these plans through the Washington Healthplanfinder exchange.

Washington divided its experiment into standard plans and the actual public option.

• Standardized Plans: All insurance carriers on the state exchange must offer standard Cascade Care plans. These feature fixed deductibles and copays, making it much easier for consumers to compare prices between different companies.
• Cascade Select (The Public Option): These are the true public option plans. To keep premiums low, the state mandates that healthcare providers (like hospitals and doctors) are reimbursed at a maximum of 160% of Medicare rates.

To make healthcare even more affordable, Washington introduced the Cascade Care Savings program in 2023. This state-funded program provides premium subsidies to residents earning up to 250% of the federal poverty level. For a single individual in 2024, that equals an income of roughly $37,650. These subsidies have helped thousands of Washington residents secure health insurance for less than $10 a month.

The Colorado Option: Mandating Cheaper Premiums

Following Washington’s lead, Colorado passed its own public option legislation in 2021 and officially rolled out the “Colorado Option” in 2023. Residents can shop for these plans on the Connect for Health Colorado marketplace.

Colorado took a more aggressive approach to premium pricing than Washington. The state law legally requires health insurance companies to hit specific premium reduction targets for the Colorado Option plans.

Compared to 2021 premium rates, insurance carriers must reduce their prices by the following margins:

• 5% reduction in 2023
• 10% reduction in 2024
• 15% reduction in 2025

If private insurance companies fail to meet these premium reduction targets, the state government can step in and set specific reimbursement rates for hospitals and doctors to force the prices down.

The Colorado Option also prioritizes accessible day-to-day care. Every Colorado Option plan mandates zero-dollar out-of-pocket costs for primary care visits, mental health consultations, and diabetic supplies. By removing the financial barrier to basic care, the state hopes to prevent costly emergency room visits later on.

Nevada Prepares for 2026

Nevada is the third state to authorize a public option. Governor Steve Sisolak signed the legislation into law in 2021, but the state is taking a longer runway to launch. The Nevada public option is scheduled to go live in 2026.

Similar to Colorado, Nevada is aiming for a 15% reduction in average premium costs over the first four years of the program. The state plans to use an aggressive bidding process. Private insurance companies will compete for contracts to manage the state’s Medicaid population, and to win those lucrative contracts, they will also be required to offer the affordable public option plans.

Challenges and Industry Pushback

Creating a state-run health plan is incredibly difficult, and these experiments face significant challenges.

The primary hurdle is pushback from the healthcare industry. Organizations like the American Hospital Association argue that capping reimbursement rates at a percentage of Medicare hurts hospital revenues. Rural hospitals, which already operate on thin profit margins, warn that forced price cuts could lead to reduced services or staff shortages.

Additionally, insurance companies in both Washington and Colorado have struggled to convince enough doctors and hospitals to accept the lower payment rates required by the public option plans. In Washington’s first year, Cascade Select plans were only available in 19 of the state’s 39 counties because of limited provider participation. Washington has since passed new laws requiring certain hospitals to participate in the public option to ensure statewide availability.

Despite these growing pains, these state-level experiments remain the most significant steps toward affordable, universal healthcare access in the United States today.

Frequently Asked Questions

Who is eligible for these state public option plans? Any resident of the state who purchases insurance on the individual market can buy a public option plan. This includes freelancers, independent contractors, and people whose employers do not offer health insurance.

Is a public option the same as Medicaid? No. Medicaid is a free or extremely low-cost program specifically for low-income individuals, funded jointly by state and federal governments. A public option is an insurance plan that individuals must pay premiums for, though it is heavily regulated by the state to remain affordable for middle-class families.

Can I keep my current doctor if I switch to a public option plan? It depends on the specific plan network. Since public option plans pay doctors less than traditional private insurance, some doctors choose not to participate. You should always check the provider directory of the specific plan to ensure your doctor is in-network before enrolling.

Are other states considering this model? Yes. States like Minnesota and Oregon have passed legislation to study or begin designing their own public option frameworks, though they have not yet launched plans to the public.