The Public Health Insurance Option, also known as the Public Option, is a Proposal to create a Government/State run Health Insurance Agency that would Compete with other Private Health Insurance Companies within the U.S. The Public Option is Not the same as Publicly Funded Health Care offered by the Federal Government. The Public Option was initially proposed for the Patient Protection and Affordable Care Act (ACA), but was Removed after Senator Joe Lieberman (I-CT) threatened a Filibuster. Subsequently, the Barack Obama Administration did Not include the Public Option into the Bill passed under Reconciliation. The Public Option would later be Supported by Hillary Clinton and the Democratic Party in the 2016 and 2020 Elections, and Multiple other Democratic Candidates, including the current President Biden.
When Washington Gov. Jay Inslee (D), last month, Signed a Law creating a New Health Plan alternative for Washington State Residents, many proclaimed Washington to be the First State with a “Public Option.” But the Term is difficult to define, even the word “Public” is slippery in the Context of Health Care. “Public option means the government being more prescriptive,” said Chiquita Brooks-LaSure, a Managing Director at Manatt Health, which Provides Consulting and Legal Services in Health Care. “There’s more of the state weighing in.”
The Bill Passed largely along Party Lines, with Republicans arguing Against the Creation of another Government Program.
In general, when Policymakers use the term “Public Option,” they mean a Health Plan with Significant Government Control. That might mean Programs created and operated by Government, as Medicare and Medicaid originally were, or Programs largely under Government Control but run by Private Entities. Public Option is a “squishy term,” said JoAnn Volk, a Research Professor at Georgetown University’s Center on Health Insurance Reforms. “It does mean different things to different people, depending on your goals and assumptions.”
Whatever Form it takes, Proponents of a Public Option believe it would provide Consumers with Health Insurance that is more Affordable.
Jason McGill, a Health Policy Adviser to Inslee who helped craft the Law, noted that the term “Public” in Health Care has already become Muddied in recent years. Medicare Advantage Plans, All-Inclusive Medicare Plans, are Offered by Commercial Insurance Carriers, and States contract with Insurance Companies to Run their Medicaid Managed Care Plans. “They are government plans,” McGill said, “but they are run by insurance companies.”
Washington State won’t be Operating its own Health Plan. Instead, it will Contract with a Private Carrier, or Several, to Oversee its Public Option, which will be on the Health Insurance Exchange alongside Commercial Plans. The Washington State Plan also will have another Layer of Rules that Officials think will Lower Premiums. Most notably, the Public Option Plan would set a Cap on Reimbursement Rates paid to Providers.
In 2017 and 2018, the Cost of Private Plans on the Exchanges Soared in many Parts of the Country, prompting at least 15 States to reconsider a Public Option through a so-called Medicaid Buy-In. Under this idea, States would use the Infrastructure and Purchasing Power of their Medicaid Agencies to create State-sponsored Plans that would be Cheaper than Commercial Products.
Nevada Lawmakers Passed a Public Option Plan that would have allowed Consumers who earn too much to Qualify for Medicaid to Buy into their State’s Plan. But then-Gov. Brian Sandoval (R) Vetoed it, saying it might Disrupt an already Fragile Market.
Premiums in Washington have Increased by more than Half over the past Two years, but McGill said that wasn’t the Only impetus for the Law. Only 61% of Washingtonians who buy Insurance on the Marketplace qualify for Federal Aid in the Form of Premium Tax Subsidies. That compares with 87% Nationally. Under the Law, Washington must Contract with at least One Private Carrier to begin Offering a Public Option in the year 2021. Under the Contract, the Carrier would have to Meet State Requirements related to Transparency, Administrative Costs and Purchasing that do Not apply to other Carriers.
McGill said the Goal is to keep Premiums for the Public Option at least 10% Lower than what Commercial Carriers Charged the previous year. To do that, the State will Limit Reimbursement Rates to No more than 160% of what Medicare Pays. Originally, the Legislature set the mark at 100%, but Lawmakers realized that Providers wouldn’t accept so Little. “A provider should jump at 160%,” McGill said. “We hope providers think that’s a fair rate.” The Law would also Limit Out-of-Pocket Expenses for Deductibles and Copayments.
The additional Requirements, and Particularly the Ceiling on the Reimbursement Rate, goes a long way toward explaining what the “Public” means in “Public Option,” said Brooks-LaSure.
Colorado Lawmakers will push ahead with One of the Nation’s most Ambitious Health Care Proposals after a Potential Deal with Hospitals Failed. The “Colorado Option” Bill would Create a State-Run Insurance Plan and Mandate Lower Costs at Hospitals by 2025 unless the Private Market finds ways to Significantly Reduce Insurance Costs First. The Bill is headed to an important Committee Hearing after several Delays, as Backers worked behind the scenes, on a Compromise with the Colorado Hospital Association (CHA), One of the most Influential Health Industry Groups in the State. “I thought we were on the precipice of a larger deal, but the hospital association walked away from negotiationst,” State Rep. Dylan Roberts (D-26th District, Avon).
The CHA now says it Opposes the Bill but Supports the Idea of Lowering Costs. CHA and other Industry Groups Negotiated for weeks on the Bill, including at a recent 10-hour Session, said Katherine Mulready, Chief Strategy Officer for the Organization. “I don’t think it’s fair to characterize either side as walking away,” Mulready said. “We hit a stumbling block yesterday and we hit a place where we didn’t think we had any more creative ideas to throw at the problem in the timeline that was being provided.”
The Two sides were discussing a Compromise that would have Eliminated the possibility of a State-Run Insurance Plan. Instead, the Proposal would have set Cost Reduction Targets and given the State the Authority to Limit Payments to Hospitals, along with other New Powers over Insurance Companies. It also would have Offered New Options for Providers. “I offered to take the entire idea of a public plan off the table if we could come to some sort of compromise, and they turned us down,” Roberts said.
Negotiations Broke-Down over the Proposed Cost Reductions, Mulready said. She Claimed the Plan would have Ultimately Reduced Payments to Hospitals too Sharply. Roberts said that the Amount was Reasonable and that he hadn’t heard of a Number as Dramatic as the Ones that Industry Officials now are citing. The Proposal would have Allowed Higher Payment Rates for Rural and Critical-Access Hospitals. The Governor’s Office and the State Department of Insurance had been closely involved in the Negotiations, Mulready said. But with the Failure to reach a Deal, the CHA moved to formally Opposing the Bill. “The industry is united in opposition to the introduced version,” Mulready said.
Roberts and the other Sponsors, State Sen. Kerry Donovan (D-5th District) and State Rep. Iman Jode (D-41st)h, still Plan to introduce Amendments in response to recent Concerns. As Colorado Democrats Prioritize Health Care Reform, State Republicans Worry about Government Overreach. Democrats have made Health Care Reform a Central Priority during Gov. Jared Polis’ (D) First Term. The Sponsors describe it as a way to Slow the Growth of Health Expenses that have Eaten-Up more and more of Americans’ Incomes. It’s also meant to ensure that Affordable Insurance Plans are Available in the State’s Rural Communities.
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