States Open Door To Public Option

Washington state became the first to implement a health insurance public option while several other states are moving closer to offering it.

Beginning in the 2021 open enrollment period, residents of Washington state have the option to enroll in “Cascade Care,” the nation’s first state public option plan. The Washington Health Care Authority contracted with five health insurance carriers to provide bronze, silver and gold-level qualified health plans in the state’s health insurance marketplace. These plans are named Cascade Care and will be offered in 19 of the state’s 39 counties in the first year.

Under Washington state’s public option initiative, the state simultaneously introduced standardized plan designs in the marketplace with higher-value silver and gold metal tiers.

Originally, Cascade Care plans were projected to decrease premiums by 5% to 10%, according to a Princeton University analysis. Finalized premiums for standardized Cascade Care public option plans are, on average, slightly more expensive ($392-$490) than nonstandardized plans ($376-$500). In all but one county, public option plans have lower premiums than nonpublic option standardized plan offerings.

Meanwhile, Colorado Democrats introduced a bill in the state legislature that opens the door to a statewide health insurance public option if insurance carriers don’t reduce health care premium costs by 20% over the individual and small-group markets.

There are two phases to the bill. In the first phase, insurance providers would be encouraged to offer a standardized health insurance plan for individual and small group plans in places where the insurers are already offering plans. This standardized health plan would be developed by the state and would have certain cost reduction goals to meet.

If the cost reduction goals cannot be met, then the second phase of the bill would take effect. In this phase, the state would implement its own public option plan, the Colorado Health Insurance Option, to compete with other insurers on the individual and small-group markets. The public option would be 20% cheaper than current average premiums on a county-by-county basis.

The Oregon House of Representatives is considering a bill that would establish a public option in that state. Manatt Health, on behalf of the Oregon Health Authority, conducted a study that evaluated three possible delivery models for the public option.

Those models include a coordinated care organization-led model, in which the state uses its existing Medicaid network; a carrier-led model, and a state-led model in partnership with a third-party administrator. In the state-led model, the state would hold the plan risk as the insurer and would use a third-party administrator for processing claims and implementing plans.

Nevada’s state legislature was the first to pass a Medicaid buy-in proposal in 2017; however, then-Gov. Brian Sandoval, a Republican, vetoed the bill, citing the need for further study. During the 2019 legislative session, the Nevada legislature enacted a resolution to study the feasibility and design of a public option.

Under the resolution, the study will explore the feasibility of offering a public option allowing all residents to participate in the Public Employees’ Benefits Program. The study was released in January for consideration during this year’s legislative session.

Democratic state lawmakers in Connecticut and the state’s comptroller announced plans late last year to introduce a new public option bill in this year’s legislative session. It won’t be the first time Connecticut legislators considered a public option. In 2019 and 2020, lawmakers attempted to pass a bill that would allow individuals and small businesses to enroll in the state employee health insurance plan. Legislators also attempted to pass a bill that would have allowed the state to contract with carriers to provide coverage in the state’s marketplace.

New Mexico passed a bill in 2019 funding the study and development of a Medicaid buy-in plan, including seeking waivers from the Centers for Medicare & Medicaid Services to receive federal funding to expand coverage and reduce costs. An earlier study conducted by Manatt Health found that a Medicaid buy-in could offer premiums that are 15% to 28% lower than current rates.

New Mexico is leaning toward a Medicaid buy-in model because Medicaid already serves 40% of the state’s population. The study will help the state decide whether to offer the public plan on or off the exchange, possibly starting this year.

Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].