Colorado is rolling out its public option plan with stakeholder meetings, while the push for the public option stalls at the state and federal level.
The state’s insurance department is meeting on Thursday with health insurance companies, brokers and employers to share information about the standardized plan framework and to hear questions and comments from participants. Colorado adopted the law earlier this summer to offer the public insurance option on and off the state’s insurance exchange by 2023.
The program is not a public option in the sense of building a government insurance entity, as the law was initially conceived. Through legislative compromise, the plan became more of a set of standards and targeted premium reductions.
Starting in 2023, insurance companies will be required to offer the state standardized plan at a premium that is 6% less than the premium rate for health benefit plans offered by the carrier this year, adjusted for medical inflation. By 2024, each carrier must offer a standardized plan premium that’s 12% less than the premium rate for plans offered by that carrier in 2021. After 2026, carriers must limit any annual rate hikes to no more than the previous year’s medical inflation rate.
Despite the concessions that proponents said watered down the law, the Colorado Association of Health Plans opposed the plan, largely because it is designed to fail, said Amanda Massey, the association’s executive director.
“I think the reason that we were so dissatisfied with the bill is basically because there’s no actuarial evidence to suggest that the bill is achievable or feasible,” Massey told State of Reform. “Utimately, we can’t see how we can achieve the goals that they’re looking for — so, the 15% reduction over three years — when we anticipate that there will certainly be costly benefits added on the standardized plan and increased reimbursements to hospitals.”
In what Massey called the law’s unworkable aims, she sees a path opening up to more regulation.
“The evidence that we have around this policy is minimal, but the evidence that we do have is based on what’s happened in Washington State,” Massey said. “And I think what you saw in Washington State is that the standardized plan was more expensive, you didn’t have a lot of uptake, and then the legislature had to come back and make changes to the policy. So I think we are concerned that we are going to see a similar pattern here in Colorado.”
Washington passed the nation’s first public option law in 2019, which was updated this year with “Cascade Care 2.0.” The second law was necessary after an underwhelming first year.
The plans were available in only 19 of the state’s 39 counties, with fewer than 2,000 people enrolled, according to Georgetown University’s Center for Health Insurance Reforms. The state-set standardized benefit designs resulted in savings in out-of-pocket costs, but public option plans were priced on average 4 percent higher than 2020 premiums.
Washington’s new law, according to the center:
• Requires hospitals that receive payments from the statewide school and public employee benefit pools or Medicaid to contract with at least one public option plan to provide in-network services to enrollees.
• Establishes a state premium subsidy beginning in 2023.
• Requires insurers participating in the marketplace to offer a standardized bronze, silver and gold plan in every county they offer marketplace products.
• Sets a cap on the number of non-standard plans a carrier may offer, “a strategy designed to streamline the shopping experience for consumers and provide the state with more power to manage its marketplace product shelf.”
• Directs the state to study the public option’s impact on hospitals, insurers and consumers, which could lead to other changes. When enrollment in the public option plan exceeds 10,000 lives, the state plans to evaluate rates paid by public option plans, impact on hospitals’ financial sustainability, impact on consumers and make recommendations to address issues identified through the evaluation.
Nevada became the second state to enact a public plan in June. The law seeks to create state-managed health insurance plans by 2026.
As with the legislation in Washington and Colorado, Nevada’s law requires insurers to provide a public option plan in certain circumstances. In Nevada’s case, if the insurer bids to cover Medicaid recipients and state employees, they must offer the state plan.
The state would select providers to be in-network for the public option plan and mandate that they charge 5% less in monthly premiums than the average plan on the state insurance marketplace and 15% less four years after it is first offered.
Connecticut failed to pass a public option for the third year. Unlike the laws in other states, the bill focused mostly on employee plans. Insurers told the governor that they might need to move workers out of the state if the law proved too costly.
Oregon postponed decisions on a public option, and is instead studying the idea. But the legislature did pass a ballot measure that will ask voters in November 2022 if they should make health care a constitutional right. The proposed constitutional amendment would give all Oregonians the right to affordable health care, regardless of whether they qualify for Medicaid. If it passes, legislators would be required to adopt some form of universal health care, according to the Lund Report.
Virginia legislators met on Wednesday to consider strategies, including a public option, to make health insurance more affordable. The legislature’s Joint Commission on Health Care has been studying the issue and found that 11.2% of non-elderly adults in Virginia were uninsured as of 2019. 82% of uninsured Virginians were in working class families and 54% had at least one full time worker.
President Joe Biden pledged during his campaign to establish a public option based on the Medicare program, and would be offered on the ACA exchanges. Biden has not offered a plan, and there has been little movement in Congress.
The House on Tuesday passed a $3.5 trillion budget framework previously passed by the Senate that reportedly lowers the eligibility age of Medicare, along with expanding that program into vision, dental and hearing coverage.
Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected]
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