By Emily Blanford
In the absence of major health reforms at the federal level, state policymakers continue looking for strategies to provide more affordable health coverage to their residents.
High out-of-pocket costs are a major area of concern, with many individuals reporting difficulty accessing care because of cost.
Ongoing litigation challenging several recent federal health policy changes drives uncertainty and may affect the stability of the health insurance market—further prompting state lawmakers to seek solutions.
During the debate over the Affordable Care Act nearly a decade ago, a “public option” was proposed as an alternative to private health plans. A public option is a government-run health plan that would compete with private plans on the health insurance marketplace, available to anyone to purchase. A public option was not adopted at the federal level in the Affordable Care Act, but some states are working to implement public options at the state level.
Washington became the first state to enact legislation requiring the implementation of a public option, with Governor Jay Inslee (D) signing HB 1523 on May 10, 2019. The bill requires Washington’s Health Care Authority, in consultation with other agencies and stakeholders, to offer multiple government-sponsored public option plans available for purchase through the marketplace by January 2021. The state will contract with commercial insurers to run the plans. These plans will have to meet additional state requirements that do not apply to other commercial plans available on the marketplace.
The Washington bill also requires that the offered plans be designed to reduce deductibles and limit out-of-pocket costs, and increase access to needed services while still offering choices for consumers. The bill limits provider reimbursement rates to comparable Medicare rates and states the goal of the public option is to assure individuals do not spend more than 10% of their income on premiums.
Colorado was close behind enacting legislation of its own with HB 19-1004, signed by Governor Jared Polis (D) on May 17, 2019. Colorado’s bill requires the Colorado Medicaid agency and the state’s Division of Insurance to develop a proposal for a public option. The state will be developing the details for a proposal and submit a final plan to legislative committees in November 2019.
States are also considering Medicaid buy-in programs, a type of public option that would utilize existing Medicaid infrastructure. Not to be confused with the existing Medicaid buy-in for people with disabilities, Medicaid buy-in proposals would provide a new option for the population of people currently not eligible for Medicaid to pay monthly premiums and essentially “buy-in” to the Medicaid program.
As with the traditional Medicaid program, states have wide latitude in the design of their buy-in programs, depending on the most pressing issues in their states. Medicaid buy-in programs can be offered on or off the marketplace, can provide full Medicaid coverage, or could offer Medicaid-like benefits while using existing Medicaid provider networks and reimbursement rates.
However, Medicaid reimbursement rates are often relatively low and there are concerns that a Medicaid buy-in option may not be able to maintain an adequate provider network to serve all consumers. No state has enacted a Medicaid buy-in, but states continue to study and consider the option.
Proponents of public options, including Medicaid buy-in plans, are hoping to provide more affordable coverage and increase choice and competition. Others worry that private plans may not be able to compete with a public option, disrupting the overall private insurance market.
State policymakers will be closely watching implementation efforts in Washington and Colorado to determine if a public option might make sense in their states.
Emily Blanford is a program principal in NCSL’s Health Program.