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With the U.S. unlikely to adopt a single-payer “Medicare for All” program, health reform advocates have instead designed a government that could compete with private insurance plans sold on health exchanges. I turned to my insurance plan. The idea behind this “public option” is that by making low-cost plans available to consumers, they can ultimately expand access to healthcare.
But the public option plan backed by Presidents Biden and Barack Obama also went nowhere due to political opposition in Congress.
So some states are taking up the banner and creating their own public option plans. It faces formidable opposition from medical institutions that are resisting.
Washington State is in its second year of offering the nation’s first public optional health insurance plan and has learned an important lesson.
Washington’s public option is like a public-private partnership. The plan was designed by the state but is provided by a private insurance company. Anyone who purchases their own insurance in the state health insurance market can sign up for his public option plan and, depending on their income, receive a large subsidy from the federal government to keep costs down. can do.
But now, two years later, the plan is only available in 25 of the state’s 39 counties, registration numbers are overwhelmingly low, and state leaders are blaming hospitals.
Rep. Eileen Cody, a Washington state legislator who introduced the public options bill in 2019, said, “The plan struggled to get the network together because hospitals don’t work. They’re a big part of the problem.”
An official with the Washington State Hospital Association said more hospitals are voluntarily participating in public option plans. But they say public options rely on cutting payments to hospitals to control costs and tying reimbursements to Medicare fees that don’t cover the hospital’s cost of providing care. He pointed out that there is
“If patients choose to enroll in public option plans rather than private insurance, it can create financial challenges over time, especially for smaller rural providers operating on narrow margins. Yes,” said Chelene Whiteaker, senior vice president of government affairs at the Hospital Group.
Last year, the Washington state legislature voted to require hospitals to sign public option plans in 2022 if public option plans are not available in each county. This obligation will come into force in 2023.
Other states see Washington’s public options struggle
Other states considering public options are learning from Washington’s challenges. Colorado and Nevada have public option plans in place for 2023 and 2026, respectively, and already have ways to force hospitals to participate. Other states considering public options, such as Connecticut, Oregon, New Jersey and New Mexico, are also likely to follow suit.
“One thing the state has learned is that hospital participation cannot be voluntary,” said Erin Hughes-Brown, director of the Center for Law, Health and Society at the Georgia State College of Law. says. “Otherwise, there is no way the public option stands a chance. We will never build a good enough network.”
Washington’s public option is designed to save consumers money, primarily by lowering the amount paid to hospitals and doctors and limiting gross payments to 160% of what Medicare pays for these services. it was done. By comparison, health insurance paid providers an average of 174% of Medicare rates.
Public Option plans are available to everyone and come in the same Gold, Silver, and Bronze tiers as private plans on health insurance exchanges. Proponents estimate that this cap will result in public option plan premiums that are 5% to 10% lower than the exchange’s traditional plans. However, public option premiums averaged 11% higher than the lowest Silver plan premiums available in each county in the market in 2021, and silver public option plan premiums were the lowest in just nine counties. The Silver plan covers about 70% of medical costs on average.
In 2021, only 1% of those who purchased a plan on an exchange chose a public option plan. Public option premiums in 2022 are approximately 5% lower than public option premiums in 2021. See how many of those who signed up paid their premiums and completed the process.
Liz Hagan, Policy Solutions Director for United States of Care, a nonprofit advocating for improved access to care, said: “People often don’t look beyond insurance premiums. They rarely look at out-of-pocket costs.”
But smart consumers are realizing that public option plans are cheaper in the long run, according to exchange officials. Lower deductibles and more non-deductible services compared to traditional exchange plans.
“Premium is still king,” said Michael Marchand, chief marketing officer at Washington Health Benefits Exchange. There are a lot of people who have.”
Marchand also said it could take several years for new products like public option plans to gain traction in the market. The insurance company may be pricing the plan a little high for his first year, not knowing what to expect. Now, with a year under their belt, they’ve lowered their premiums somewhat.
Limited options for cost savings
Washington’s stumbling block from the gate reflects the difficulty of lowering healthcare costs while working within the current system. but raised the cap on the bill so hospitals would not oppose it. It is currently unclear whether the payment cap will be low enough to lower premiums.
“It’s kind of a big trade-off,” said Aditi Sen, a health economist at the Johns Hopkins Bloomberg School of Public Health. not so much that they won’t participate.”
This will be a challenge for state or federal public option plans. There are many ways to lower your insurance premium. Hospitals, doctors, and other health professionals are strongly opposed to lowering payment rates, and insurance plans are hesitant about plans that could hurt profits.
Plans can reduce the size of provider networks and save money, but consumers don’t like plans that limit the doctors they can see. Public option plans may rely on existing public health programs such as Medicare and Medicaid. These programs already pay lower rates than commercial insurance, but government-run insurance plans have negative connotations for many consumers.
Sen and her colleagues found that in 2021, Washington counties with public option plans will be primarily in areas where hospital and doctor pay rates are lower than the rest of the state. This may have helped insurers build networks and maintain a 160% provider payout cap.
Five of the 12 private insurance companies that sell plans on the stock exchange offer public option plans.
Insurance companies that previously offered plans in Washington were able to put together networks based on existing contracts with hospitals and physician groups. But his two carriers, new to the Washington exchange, had to start from scratch and negotiate prices with providers of public options his plans. Some insurers have tried to offer public option plans in other counties, but have been unable to convince hospitals, especially those in large hospital systems, to accept their rates.
In Washington, due to the COVID-19 pandemic, enrollment in Public Option Plans began to increase during a special enrollment period that began in mid-2021. The American Rescue Plans Act also provided more subsidies, making all of the exchange’s plans more affordable. It is scheduled to expire. The Biden administration’s Build Back Better bill includes an extension, but the bill has stalled in Congress.
The Washington State Legislature has approved other moves to make public options more affordable. They have set aside $50 million for him in state grants, but officials still have to decide how to allocate those funds. And lawmakers allowed states to pursue waivers with the federal government to help them retain more of the savings achieved through lower premiums. Low premiums today mean low federal subsidies. States may require that these savings be passed on to consumers.
Washington did not pursue such waivers before implementing its public option plan, but many believe the Biden administration may be more amenable to such demands than the Trump administration.
The state’s progress on public option plans has been attributed, among many progressives, to Congress’ failure to implement federal public options to compete with private plans in the marketplace under the Affordable Care Act. It was done in disappointment.
Washington officials recognize that other states are watching closely how it plays out, as they were the first to implement the public option. “We’re not the only ones, but we’re the most advanced,” Cody said. “Others can learn from our mistakes.”
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. This is an editorially independent operating program. KFFMore (Kaiser Family Foundation).