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Washington state has the distinction of being the first state in the country to offer a 'public option' in its health insurance marketplace. I put that in quotes only to note that what they're doing is a bit different from what was contemplated nationally a decade ago: the creation of a new public health insurer (paying providers at or near Medicare prices) to compete with the commercial insurers selling in the marketplaces. What Washington is doing instead is more analogous to how Medicare Advantage works: commercial sellers are just selling another product line, but they benefit from tagging onto government-set prices for doctors and hospitals. For Medicare Advantage plans, those insurers tend to pay health care providers at or near what Medicare itself does, while private insurers selling Washington's public option are subject to price caps (160% of Medicare prices) when it comes to what they can pay health care providers.
Washington is the first but not the last: Colorado and Nevada will be launching their own versions of a public option later this decade, and other states are likely to follow. And this hunger for public options--at the state-level if a national one can't get passed--is primarily a manifestation of a desire for at least a backdoor way of taking a whack at provider prices.
This comes as both deep-blue states ("Mass General Brigham required to rein in costs, Health Policy Commission says") and deep-red states ("Top Republicans threaten Indiana hospitals over prices") alike are increasingly willing to pick public fights over hospital prices.
But back to Washington: as the first, they're going to be watched closely. And NPR has a check-up today on how it's going now that they're in Year 2 of the experiment.
The 1st public option health plan in the U.S. struggles to gain traction
So far the impact of the public option plans has been negligible. Washington caps the prices any public option plans can pay providers at 160% of Medicare, which is below prevailing marketplace reimbursement rates (estimated by Washington's Health Benefit Exchange to be ~174% of Medicare prices) but not massively.
In fact, that seems to have been a sweet spot: just enough to generate little (and in some geographies, no) pricing advantage for public option plans--whose premiums didn't differ much from other offerings last year--but enough to trigger pushback (non-participation) by enough hospitals to limit the geographical reach of the public option plans. (Unlike in Nevada and Colorado's forthcoming approaches, Washington didn't initially use any levers to compel hospitals to participate.) The result is that last year virtually no one enrolled in a public option plan. (Really, about 1,400 people in a marketplace enrolling more than 200,000 people). This year public option premiums are falling about 5% on average as other plan types rise, and the geographic reach of the public option plans is expanding. But they've got a long way to go to becoming relevant, much less a market-altering force.
What NPR mentions almost as a throwaway is that Washington's legislature has already taken action, passing a law last year that nudges any hospital participating in Medicaid or the state employee health plan into participation in a public option plan. In any counties that have no public option plan offering this year, for next year they'll have to contract with at least one if an offer is put on the table from a payer. So the slow start may not be an issue as the decade rolls on. We'll see.
Washington is the first but not the last: Colorado and Nevada will be launching their own versions of a public option later this decade, and other states are likely to follow. And this hunger for public options--at the state-level if a national one can't get passed--is primarily a manifestation of a desire for at least a backdoor way of taking a whack at provider prices.
This comes as both deep-blue states ("Mass General Brigham required to rein in costs, Health Policy Commission says") and deep-red states ("Top Republicans threaten Indiana hospitals over prices") alike are increasingly willing to pick public fights over hospital prices.
But back to Washington: as the first, they're going to be watched closely. And NPR has a check-up today on how it's going now that they're in Year 2 of the experiment.
The 1st public option health plan in the U.S. struggles to gain traction
Washington state, in its second year of offering the nation's first public option health insurance plan, has learned an important lesson: If you want hospitals to participate, you're probably going to have to force them. . .
But two years in, the plans are available in only 25 of the state's 39 counties, enrollment numbers have been underwhelming, and state leaders blame hospitals.
Washington's stumble out of the gate reflects the difficulty of lowering health care costs while working within the current system. Legislators originally wanted to cut payment rates to hospitals and other providers much more, but they raised the cap in the legislation so hospitals wouldn't oppose the bill. Now, it's unclear whether the payment cap is low enough to reduce premiums.
So far the impact of the public option plans has been negligible. Washington caps the prices any public option plans can pay providers at 160% of Medicare, which is below prevailing marketplace reimbursement rates (estimated by Washington's Health Benefit Exchange to be ~174% of Medicare prices) but not massively.
In fact, that seems to have been a sweet spot: just enough to generate little (and in some geographies, no) pricing advantage for public option plans--whose premiums didn't differ much from other offerings last year--but enough to trigger pushback (non-participation) by enough hospitals to limit the geographical reach of the public option plans. (Unlike in Nevada and Colorado's forthcoming approaches, Washington didn't initially use any levers to compel hospitals to participate.) The result is that last year virtually no one enrolled in a public option plan. (Really, about 1,400 people in a marketplace enrolling more than 200,000 people). This year public option premiums are falling about 5% on average as other plan types rise, and the geographic reach of the public option plans is expanding. But they've got a long way to go to becoming relevant, much less a market-altering force.
What NPR mentions almost as a throwaway is that Washington's legislature has already taken action, passing a law last year that nudges any hospital participating in Medicaid or the state employee health plan into participation in a public option plan. In any counties that have no public option plan offering this year, for next year they'll have to contract with at least one if an offer is put on the table from a payer. So the slow start may not be an issue as the decade rolls on. We'll see.