Millions of Americans who buy individual health insurance, and don't qualify for a federal subsidy, have been hit with sticker shock in recent years. Instability and uncertainty in the individual market — driven in part by changes Congress and the Trump administration made to the Affordable Care Act — have resulted in double-digit premium increases.

Now Washington state has passed a law designed to give consumers another choice: a new, "public option" health insurance plan that, in theory, will be cheaper.

Washington Gov. Jay Inslee, a Democrat who's running for president, signed the measure into law on Monday.

"Washington state is leading the nation in a brighter way to provide for the health and security of our families," Inslee said at a bill signing ceremony in the state Capitol in Olympia.

Talk of a public option has been around since before passage of the Affordable Care Act. Generally, the idea is for the government to create a health insurance program to compete with the private marketplace, one that, unlike Medicaid and Medicare, would be available to all.

Washington's embrace of a public option comes as Democratic candidates for president are talking about "Medicare for All" proposals and some states are considering letting people buy in to Medicaid. Washington is thought to be the first state law to authorize the creation of a public insurance plan of this type.

But is Washington's approach to individual health care a true public option?

"It depends on how you define a public option," says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation.

Under Washington's approach, called Cascade Care, the state will not get into the insurance business. Instead, Washington is creating more of a hybrid public-private system where the state will contract with private health insurers to administer the plans, but will control the terms to manage costs. In that sense, says Tolbert, what Washington is creating could be called a state-sponsored plan.

Still, Tolbert says, it's not yet clear how much of a game changer Washington's new health insurance law will be.

"I think we have to wait and see," she says.

Washington state, Tolbert notes, has a history of leading the way on health care by seeking innovative approaches to expand coverage and ensure affordability.

But she also has a reality check for consumers regarding the new Washington law.

"It will likely be a lower-cost option, but [it's] unlikely to be a dramatic savings over what people are paying today, more likely a modest savings," Tolbert says.

Even sponsors of the legislation acknowledge the state plans may save consumers only 5-10% on their premiums.

Democratic state Rep. Eileen Cody, who sponsored the House version of the public option bill in Washington, says that given the climate of rising costs, it's less about bringing prices down than about holding the line on premium increases.

"What we're hoping is the rate that you pay today is what you'll pay when this comes on the market," Cody says.

How it works

Here's how Washington's new law is intended to work.

Starting in 2021, consumers seeking individual coverage will have the option to buy a state-sponsored plan on the Health Benefit Exchange, the state's online insurance marketplace. To keep premium and deductible costs down, the new plans will cap total provider and facility reimbursement rates at 160% of Medicare.

That cap is the keystone of the new law.

"It's the first time that anybody has put a rate cap on a plan and tried to make sure that those people who are buying insurance don't have to pay so much," says Cody.

Another feature of the new law may give consumers some relief from other, out-of-pocket expenses. By 2021, the exchange will create standardized health plans with the goal of lowering deductibles and copays.

The creation of the Cascade Care program, at the request of Gov. Inslee, follows years of volatility and steep premium increases in Washington's individual health insurance market.

Washington state officials say the individual insurance market has been buffeted by a series of actions by the Trump administration and Congress. These include the end of federal reinsurance and cost-sharing payments, as well as the suspension of penalties for individuals who don't buy coverage.