# What the State Public Option Act Actually Does

This bill creates a new way for people to buy into Medicaid coverage directly, rather than only being eligible through traditional income-based requirements. Starting in 2026, any resident of a state that chooses to participate can purchase Medicaid coverage, regardless of their income level. This is the key innovation—it treats Medicaid like a product you can buy, similar to how you'd purchase insurance on the healthcare marketplace, rather than a program you qualify for based on financial need.

The bill sets up rules for how much people would pay for this coverage. States can charge premiums and require cost-sharing (like copays and deductibles), but with important limits. Premiums can't exceed 8.5 percent of a family's household income per year, and other out-of-pocket costs are capped at the same levels that apply to marketplace insurance plans. People who buy into this Medicaid option would also qualify for the same tax credits and subsidies that help lower-income people afford marketplace insurance, which could significantly reduce their actual costs. Additionally, states must offer this coverage through their healthcare marketplaces so people can enroll during the same open enrollment periods as regular marketplace plans.

The federal government would cover 90 percent of the administrative costs for states running this program, and any premiums collected above what's actually spent on medical care would be split 50-50 between the state and federal government. This creates a financial incentive for states to keep costs reasonable. The practical effect is that people without access to affordable employer coverage or marketplace plans would have another option—they could potentially buy into a government health insurance program that might offer lower costs than private insurance, while states get federal support to run the program.

State Public Option Act

Schrier, Kim

State Public Option ActThis bill allows residents who are&nbsp;not already eligible for Medicaid&nbsp;and not concurrently enrolled in other health insurance coverage to&nbsp;buy into&nbsp;a state&nbsp;Medicaid plan&nbsp;beginning January 1, 2026, at the option of the state. State Medicaid programs may set premiums and cost-sharing requirements for such coverage in accordance with specified limitations.The bill also (1) provides the enhanced Federal Medical Assistance Percentage (i.e., federal matching rate) to every state that expands Medicaid coverage for individuals who are newly eligible under the Patient Protection and Affordable Care Act, regardless of when such expansion takes place; and (2) requires state Medicaid programs to cover comprehensive sexual and&nbsp;reproductive health care services, including abortion services.