Proposed 'State Public Option Act' Creates Medicaid Buy-In, Mandates Abortion Coverage, and Boosts Primary Care Pay

The proposed State Public Option Act is a massive shake-up to public health insurance, primarily by creating a new path for states to offer a Medicaid ‘buy-in’ option starting January 1, 2026. This means certain people who don’t currently qualify for Medicaid might be able to purchase coverage, similar to how people buy plans on the Affordable Care Act (ACA) Marketplace. The bill also makes two other major changes: it mandates that all state Medicaid plans cover comprehensive sexual and reproductive healthcare, including abortion, and it permanently extends a higher pay rate for primary care providers.

The Medicaid Buy-In: Insurance with a Catch

Section 2 sets up the new Medicaid buy-in, which is designed to catch people who might be stuck in the coverage gap or who earn too much for traditional Medicaid but still struggle to afford private insurance. The federal government is offering a sweet deal to states that participate, covering 90% of the administrative costs. That’s a strong incentive for states looking to expand coverage without crushing their budgets.

Here’s the catch for you, the potential buyer: If you fall into the group defined in the bill’s mysterious subsection (uu) (which isn’t detailed here), the state can charge you premiums and cost-sharing. These premiums are capped at 8.5% of your household income, and the charges must be based on 'actuarial soundness.' The good news is that this buy-in coverage is treated like a ‘silver’ plan on the ACA Marketplace, meaning you’re eligible for federal premium tax credits and cost-sharing reductions to help offset those costs. This structure is designed to make the coverage affordable, but it’s important to note that for the first time, some Medicaid enrollees will be paying premiums based on their income.

Primary Care Gets a Pay Raise

Section 4 is a win for doctors, nurses, and clinics that provide basic healthcare. The bill renews and expands the requirement that state Medicaid programs pay primary care providers at least 100% of the Medicare Part B rate. This payment floor was previously temporary, but this bill makes it permanent and extends it to a broader list of providers, including OB/GYNs, advanced practice clinicians (APCs), and Federally Qualified Health Centers (FQHCs). For someone in a rural area, this is huge: higher reimbursement rates mean providers are more likely to accept Medicaid patients, potentially improving access to routine check-ups and preventative care.

However, there’s a small but critical detail: the definition of “primary care services” under this section specifically excludes services provided in a hospital emergency department. So, if you rely on the ER for non-emergency primary care (a common issue in underserved areas), those services won't necessarily benefit from this mandated pay increase.

Mandating Reproductive Health Coverage

Section 6 introduces a major policy shift by mandating that all state Medicaid plans must cover “comprehensive sexual and reproductive health care services,” and it explicitly includes “abortion services and any services related to abortions” in this definition. Starting January 1, 2026, states will be required to include this coverage to have their Medicaid plans approved by the federal government. This provision standardizes coverage across all states, removing existing state-level restrictions on using Medicaid funds for abortion services.

Federal Funding and State Timelines

Finally, Section 5 fixes a technical issue with how the federal government funds Medicaid expansion. Currently, enhanced federal funding (FMAP) for states covering newly eligible individuals is tied to fixed calendar years. This bill changes that, linking the enhanced funding timeline directly to the date a state actually starts providing coverage to those new groups. This is a practical change that ensures states get the full benefit of the federal funding boost, regardless of when they implement their expansion, making the funding process more flexible and fair for states that move slower on implementation.