Public option health care can be defined in terms of its use in American politics during, and shortly after, the successful candidacy of President Barack Obama in 2008. Alternately, the term may be used more loosely to discuss government run health services in most developed countries.
In the late 2000s, then Senator Obama ran on a platform that included huge changes to health care insurance and delivery. In particular, he proposed public option health care, which would compete with private insurers and be an alternative for those who couldn’t or didn't want to obtain private insurance. Though details of public option health care were not finalized before President Obama’s election, many analysts suggested that the public plan would have greatly resembled Medicare, which is offered to citizens or qualifying residents when they are 65 or older.
It was Obama’s contention that public option health care would have a beneficial effect on private insurers because it would keep them from hiking rates or skimping on payments or services. The public option could set the standard for health insurance and insurers would need to stay competitive by copying that standard. Insurers were vocally and deeply opposed to the establishment of this option, and argued that they could not compete against a single huge insurance pool established by the US government.
The matter of whether public option health care would be a part of health reform came to a head with numerous rewritings of the President’s proposed legislation. Most Democrats, with the exception of the more conservative Blue Dogs, favored giving people the chance to participate in a publicly funded insurance plan. Ultimately though, the Blue Dogs and a few Republicans in favor of some form of universal health care argued that public option health care could not exist in a final bill, and it was discarded.
Instead of public option health care, a compromise was to create insurance exchanges for people to join if they did not have insurance. These exchanges include numerous insurers and American health coverage remains primarily in the hands of private companies. Some parts of the health bill have been declared unconstitutional, but large parts of it have stood.
In general, public option may simply refer to any health system where the government and the people’s taxes control health care and its delivery. Sometimes countries have both private and public options. A public option may or may not have equivalent health coverage to a private option or a private option augments the government health care. For example, Canada sells private insurance to cover the costs of prescription drugs, but most other medical services are freely available.