Biden has paused a public option. Nevada is about to try its own.
A federal public option isn’t happening anytime soon, so Nevada officials are creating their own.
The Democratic-led state legislature recently passed a bill establishing a type of public health insurance option, aimed at lowering costs and improving access to coverage for state residents. Gov. Steve Sisolak, a Democrat, has said he will sign it.
The move comes as President Joe Biden focuses on passing his massive infrastructure and care plans, which would make permanent more generous federal subsidies for Obamacare policies but don’t include more controversial steps to expand health care access. And it comes as the federal Affordable Care Act faces its most severe challenge before the Supreme Court, which is set to rule in the coming weeks on the fate of the landmark law.
Nevada would be the second state to launch a public option program, following Washington, where “Cascade Select” policies began being sold on the state Affordable Care Act exchange this year. The goal is to offer plans that have lower premiums and pay providers less than private insurance, ultimately reducing overall health care costs in the individual market.
Neither is truly a government-run public option, however. As in Washington, the plans in Nevada would be sold by private insurers but with government input in their design.
The policies would be available starting in 2026. The bill calls for premiums to be at least 5% less than the benchmark plan on the state exchange in the first year and at least 15% less over the first four years.
The legislation doesn’t provide a detailed plan on how to achieve those reductions. But it generally pegs health care provider payments to Medicare, which typically pays much less than commercial insurance — directing reimbursement rates to be “comparable to or better than” Medicare rates, in the aggregate.
Facing blowback from the health care industry, the Silver State is taking steps to make sure that both insurers and providers participate. Carriers offering Medicaid managed care plans in the state would have to submit bids to sell public option policies, and doctors and hospitals who participate in Medicaid or the state employee health program would have to join at least one network.
Three insurers currently provide Medicaid plans in Nevada, said Heather Korbulic, executive director of Silver State Health Insurance Exchange, which runs the state’s Affordable Care Act marketplace.
Industry groups representing doctors, hospitals and insurers in the state attempted to derail the bill and have urged the Sisolak to veto it.
“The public option provisions of the bill are neither a solution nor a benefit to Nevadans,” they wrote in a May 31st letter to the governor, noting that the legislation would “add costs, increase burdens and damage both the health insurance market and health care provider network.”
Tough to achieve goals
How successful these state-based public options will be at achieving their aims remains a question.
In Washington, fewer than 2,000 people signed up for the Cascade Select plans during open enrollment, as of mid-January. That’s less than 1% of total Obamacare exchange enrollment — and the trend has largely continued during the special enrollment period currently underway, according to the Washington Health Benefit Exchange.
Also, average premiums for the Cascade Select plans are 4% higher than those of 2020 average premiums. And, while five insurers are participating, policies are only available in 19 of the state’s 39 counties, according to the exchange.
States have dabbled in creating some type of public option for several years now, and Colorado and Oregon are currently exploring such a measure. However, the latest effort in Connecticut died last month.
“The lesson is this stuff is complicated,” said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. “The dynamics between payers and providers are not always easy to direct from a state level.”
The complexity and fierce resistance from the health care industry are among the reasons why a public option was dropped from the Affordable Care Act legislation in 2010.
While the state efforts help normalize the idea of public option, they don’t necessarily put more pressure on Biden or Congress to move forward, said Billy Wynne, a health care consultant and founder of the Public Option Institute. But they could become more prevalent among states, which may need federal approval to institute their plans.
“It does show that the Biden administration is going to need to respond to this appetite among the states to implement public option programs with federal support,” Wynne said.
More generous Obamacare subsidies vs a federal public option
Though Biden campaigned on creating a federal public option — rather than the fully government-run “Medicare for All” plan favored by Sens. Bernie Sanders and Elizabeth Warren — he has not taken steps to pursue one since taking office in January.
Biden did not include a public option in either his $1.9 trillion relief package, which he signed into law in March, or in his more recent American Families Plan proposal. And though the public option was mentioned briefly in his recent $6 trillion budget proposal, he did not provide funding or more details.
Instead, the President has focused on providing more generous federal subsidies for Obamacare policies, which may minimize the urgency to enact public option plans. The relief package put the richer subsidies in place for two years, while the American Families Plan would make them permanent.
But while this federal assistance helps reduce premiums for consumers, it doesn’t do anything to curb the cost of health care itself — which is one of the goals of the public option.
Meanwhile, Democratic lawmakers want to explore a federal public option.
Washington Sen. Patty Murray and New Jersey Rep. Frank Pallone, who each chair committees with health care oversight, announced in late May that they plan to develop legislation to establish a public option.
“A federal public option will help guarantee that no matter where you live, who you are, or what your income — if you live in America, you can get the quality health care you need without worrying about cost,” they said in a joint statement.
