Nevada is on the verge of creating a new public health insurance option in a bid to check spiraling health costs and extend coverage to thousands of uninsured residents.
The Nevada bill, which has passed both legislative houses and awaits Democrat Gov. Steve Sisolak’s signature, would make Nevada the second state to adopt a “public option” to give consumers an alternative to private health insurance plans.
Washington state's public health option began this year, but fewer than 2,000 residents initially signed up. Colorado is advancing legislation that would aim to reduce premiums and limit provider rates.
Proponents say public health insurance options would bring needed competition to private insurance plans, lowering monthly premiums and out-of-pocket costs for consumers who buy their own insurance. That reality, however, hinges on whether hospitals, doctors, drug companies and other health providers are willing to take less for their services, experts say, and whether insurers limit deductibles and other cost-sharing provisions that make consumers pay more out of pocket.
While health policy experts are closely monitoring how the bills and legislative debates unfold in statehouses, Congressional Democrats are refocusing on a vision liberals championed during negotiations that led to President Barack Obama's signature 2010 health law, the Affordable Care Act.
Last week, two prominent Democrats, Sen. Patty Murray of Washington and Rep. Frank Pallone of New Jersey, called for ideas on what a national public option plan might include. Signaling early opposition, an industry group immediately warned a public option would strain hospitals already reeling from the COVID-19 pandemic.
"This type of proposal would strip significant resources from providers by relying on inadequate reimbursement rates, increasing the risk of hospital closures and threatening access to care for patients and communities," American Hospital Association CEO Rick Pollack said in a statement.
As a presidential candidate last year, Joe Biden touted the national public option as a more modest and affordable step than a government-run Medicare for All endorsed by his rivals. But since President Biden began his term, he's been silent on such a bold health overhaul, instead backing more generous subsidies and an extended enrollment period for Affordable Care Act plans.
Analysts say the idea of a public option is appealing to some because Americans are fed up with ever-higher and unaffordable health costs.
"Clearly there is momentum here to do something about the high and rising prices for health care," said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. "Lawmakers are feeling pressure from their constituents to do anything about health care costs."
Hospitals, providers balk at lower payments
Only Washington has enacted legislation to create a public health insurance option, and it’s been a struggle, said state Rep. Eileen Cody, a retired nurse who sponsored the 2019 legislation.
Washington's Cascade Select program is described as a public option but is not a government-run health plan. It's sold by private insurers who must include standard benefits, deductibles and set rates for hospitals and other providers.
Five insurers sold public option plans in 19 of Washington’s 39 counties during this year's enrollment period. And those plans charged higher monthly premiums than private plans in most counties. During open enrollment through Jan. 15, just 1,872 people chose the state’s public option plan, according to a Washington Health Benefit Exchange report. Signups have been extended through Aug. 15 under the state's public health emergency, so final figures are not available.
"Washington really had to pull a lot of its punches in the 2019 bill, and the result was premiums were not in fact lower," said Corlette. "There are very powerful interests involved, particularly hospitals and doctors who resist any cut in their income."
The biggest battle in establishing the state's program has been setting reimbursement rates for hospitals and other health providers, Cody said. Legislators had hoped hospitals and other providers would accept rates equal to what Medicare pays, but health industry stakeholders balked before striking a compromise with more lucrative payment rates.
Cody is optimistic the legislative fixes signed by Gov. Jay Inslee this year will make the public option plans affordable and available for more Washington counties next year. Still, the retired rehab nurse said the legislative fight to make incremental improvements has been difficult.
"It’s the providers that most opposed the idea of the public option, at least here in our state," Cody said.
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'Status quo works for them'
Nevada’s plan calls for insurers to offer a public health insurance plan with monthly premiums at 5% below a community's "benchmark" Affordable Care Act plan. The average premium costs would be reduced 15% over four years.
Like Washington, Nevada's public option would be sold through private insurers.
Backers of the Nevada legislation believe insurers will offer public option plans because the legislation requires they do so in order to be eligible for lucrative Medicaid contracts.
Nevada, like many states, contracts with private insurers to manage Medicaid health plans for low-income and disabled residents. Such plans can yield millions of dollars in profits for insurers who successfully manage them, said Martin Fitzgerald, executive director of the nonprofit New Day Nevada and a former aide to Democrats in Nevada's legislature.
Similarly, the legislation also seeks to compel hospitals and other health providers to join these plans with rates that equal or surpass what Medicare pays. Any hospital or doctor paid through the state's workers compensation or public employees benefits program would be required to contract with public option plans.
Under the Nevada bill, public option plans would not be available to consumers until 2026. The state also would need to complete a budget analysis and seek a waiver form from the federal government to begin the program.
Industry groups representing Nevada hospitals, doctors and health plans sought to merely study such an approach. But the bill creating the plans passed the Nevada Senate and Assembly this week. Gov. Sisolak on Tuesday said he will sign the bill despite strong opposition from hospitals and insurers.
Fitzgerald said Nevada's legislation aims to created more affordable options for the state's 350,000-plus uninsured residents. It's also a sign lawmakers want to address long-standing concerns about affordability and health outcomes.
"We pay some of the highest health care rates and get some of the worst results," Fitzgerald said.
Krutika Amin, a Kaiser Family Foundation associate director and researcher, said the states' efforts reflect continued concerns about how much consumers pay out of pocket for health care. "Under this giant umbrella of a public option, there will be continued interest at the state and federal level to help improve affordability," she said.
Wendell Potter, a former insurance industry executive who advocates for health reform, said states are acting because employers and consumers are fed up with ever-increasing medical bills and health insurance costs.
"I still think it’s important for lawmakers at the state level to try to figure out how they can move forward in the face of enormous opposition from my old industry," Potter said. "They don’t want to have any outside influence on how they do business. The status quo works for them."
Ken Alltucker is on Twitter at @kalltucker, or can be emailed at email@example.com
This article originally appeared on USA TODAY: Nevada, Washington push ahead with state public health insurance plans