CBO: A Public Option for Health Insurance in the Nongroup Marketplaces: Key Design Considerations and Implications

A Public Option for Health Insurance in the Nongroup Marketplaces: Key Design Considerations and Implications

Some Members of Congress have proposed introducing a federally administered health insurance plan, or “public option,” to compete with private plans in the nongroup marketplaces established by the Affordable Care Act. In this report, the Congressional Budget Office describes the key design considerations of such a public option and some of their major implications.

Read the full analysis here.

American Academy of Actuaries: Drivers of 2021 Health Insurance Premium Changes: The Effects of COVID-19

American Academy of Actuaries: Drivers of 2021 Health Insurance Premium Changes: The Effects of COVID-19

The 2021 individual and small group health insurance premium rate filing process is underway. Actuaries develop proposed premiums based on their projections of medical claims and administrative costs for pools of individuals or groups with insurance. Projected medical claims reflect unit costs and utilization levels, as well as the mix and intensity of services, all of which can vary by geographic area and from one health plan to another. The composition of risk pools is also important, as medical claims will reflect the health status of individuals in the risk pool. Laws and regulations—such as benefit requirements, issue and rating rules, and risk-sharing programs—can affect the composition of risk pools and projected medical spending, as well as the amount of taxes, assessments, and fees that need to be included in premiums.

Read the full article here.

Summary of RAND’s Public Options for Individual Health Insurance

Summary of RAND’s Public Options for Individual Health Insurance

Download PDF

In Brief

The RAND Corporation (RAND) conducted an analysis of four public option program designs and their effects on the individual health insurance market. While the effects vary across the four scenarios, the analysis concluded that each would result in a mixed set of “winners and losers,” with the negative effects largely falling on the subsidized population (i.e., many of those who currently require financial assistance to afford health insurance would be less able to afford it under these programs). However, the analysis primarily focuses on the effects of premiums – themselves driven by provider reimbursement rates – offering the ultimate conclusion that individuals must consider additional design elements other than premium amounts when developing public option programs.

Overview

The analysis examined four potential arrangements of a public option program and their effects on premium amounts, affordability, enrollment, and federal government savings. These effects ultimately informed an assessment on how such arrangements might impact the public welfare. The four scenarios RAND examined are shown in the table below.

Note that Scenarios 3 and 4 resemble Washington State’s public option program approach.

Projected Effects

As stated, the analysis examined the differing effects of these plans across a variety of dimensions. We outline those effects below.

Public Welfare

RAND estimated sizeable numbers of those who would and would not benefit under each scenario. Individuals “better off,” as RAND defined it, are those who would become newly insured or pay less for at least the same level of insurance. Those who would be “worse off” are individuals that would become uninsured or pay more for coverage. A breakdown for each scenario follows.

As shown, the effects are largely centered around the subsidized population. The driving factor in each scenario is whether it lowers APTC amounts, and, if so, by how much. For example, Scenario 1 would not affect APTC amounts, which suggested a generally positive outlook for the subsidized population. Benefits would also accrue to 3 million individuals who do not receive federal subsidies.

Implications

The analysis suggests that provider reimbursement rates and the resulting premium amounts play a significant role in affordability, enrollment, and federal government savings. In a vacuum, decisions around rate and premium setting could mean the difference between an overall increase or decrease in the general welfare.

However, premium amounts are not the only factor in determining the overall impact of a public option program. As RAND indicates, its analysis does not speak to the effects of States reinvesting federal savings on affordability and enrollment. In fact, in its assessment, RAND states that “the number of people better off outweighs the number who are worse off,” likely drawing on the assumption that States would use any realized savings to improve coverage affordability. Moreover, additional elements such as benefit design; mandated versus voluntary provider participation; and, whether one or many carriers participate in a particular public option program all have affordability implications as well.

As such, it will be important for any designer of a public option program to consider these additional elements in tandem with rate setting decisions. In addition, public option program designers must also have a clear understanding upfront of the population they primarily wish to serve (e.g., subsidized versus unsubsidized individuals) and their program goals (e.g., expanded coverage, increased affordability, increased quality, and/or robust access to provider networks). Such a multi-variate understanding will then inform the decisions a designer must make, especially when trade-offs are involved.

Medicaid Buy-In: Program Options and Considerations

Medicaid Buy-In: Program Options and Considerations

State and federal policymakers have proposed various strategies to improve overall coverage and affordability, including allowing people to buy into their state Medicaid program or coverage comparable to that on the ACA exchanges. Although the details of various proposals differ substantially, they share a common element: using the flexibility allowed under the ACA to create new state-administered options as alternatives to existing exchange coverage. The term Medicaid buy-in is often used to describe such proposals because the programs would be administered by the state or rely on existing Medicaid infrastructure and would require individuals to pay a premium to purchase, or buy into, coverage

Read more here.

States Seek to Improve Affordability, Expand Coverage with "Public Option" and Medicaid Buy-In Proposals

The January 2020 Kaiser Family Foundation tracking poll finds that 68 percent of Americans would support a government-run “public option” plan to compete with private health plans. This type of support prompted a wave of activity during the 2019 state legislative sessions, when at least 10 states debated adoption of a public option-type plan to improve coverage affordability and reduce the numbers of uninsured. Our new report, States Seek to Improve Affordability, Expand Coverage Through Public Option and Medicaid Buy-in Proposals, documents this activity and assesses the opportunities and challenges for states to enact a public option plan. MORE

State Opportunities to Advance Health Care in 2020

State Opportunities to Advance Health Care in 2020

Health care continues to be a top priority as we enter 2020. Congressional deadlock over prescription drug pricing and protections against surprise medical bills offers state leaders the opportunity to lead the way toward accessible, affordable health care for individuals and families.

State leaders understand their responsibility to their constituents and can put politics aside to address problems impacting the daily lives of their family, friends and neighbors.

This year, state lawmakers will build on the momentum generated during 2019; some will champion bold measures, others will take small steps, and the rest will use 2020 to lay the groundwork for transformative health care policies in 2021. Initiatives passed over the next year will be strong predictors of future state and federal action

Read the full report here.

Health Care Administrative Costs in the United States and Canada, 2017

Health Care Administrative Costs in the United States and Canada, 2017

Before Canada's single-payer reform, its payment system, health costs, and number of health administrative personnel per capita resembled those of the United States. By 1999, administration accounted for 31% of U.S. health expenditures versus 16.7% in Canada. No recent comprehensive analyses of those costs are available.

Read the full article here.

Healthcare Affordability State Policy Scorecard

Healthcare Affordability State Policy Scorecard

Polling data repeatedly shows that healthcare affordability is the number one issue that state residents on both sides of the political aisle want their policymakers to work on.1 To inform policy conversations and support policymaker responsiveness, this Healthcare Affordability State Policy Scorecard details a variety of approaches to addressing the burden of healthcare affordability.

Read the full report here.

10 Key Questions on Public Option Proposals

10 Key Questions on Public Option Proposals

Several democratic presidential primary candidates and Members of Congress have proposed or endorsed a “public option” to expand health coverage and lower health care costs, giving people the choice between private insurance and a publicly-sponsored plan. The approaches of public option proposals differ from Medicare-for-all in that they expand upon, rather than replace, current sources of coverage (e.g., employer-sponsored plans, the marketplaces, Medicare, and Medicaid). Similar to Medicare-for-all, a public option could make broader use of Medicare-like provider payment rates, lowering the cost of coverage relative to private insurance. Recent polls find greater support for a public option than for Medicare-for-all.

Read the full brief here.

From Incremental to Comprehensive Health Insurance Reform: How Various Reform Options Compare on Coverage and Costs

From Incremental to Comprehensive Health Insurance Reform: How Various Reform Options Compare on Coverage and Costs

The expansion of Medicaid eligibility, financial assistance for purchasing private nongroup insurance, regulatory reforms, an individual responsibility requirement, and other components of the Affordable Care Act (ACA) led to substantial reductions in the number of uninsured, increased access to care, reduced uncompensated care, and eliminated explicit discrimination against the sick in private health insurance markets. However, three years after implementation of the full coverage reforms, significant problems remain. Though expanded coverage lowered costs for many people, many still found premiums and cost-sharing requirements too high to participate. A Supreme Court decision that made the Medicaid expansion optional for states left many poor adults in 17 states without any way to obtain affordable coverage. Adverse selection into the private nongroup market in some areas, and little to no provider and/or insurer competition in others, has led to high and, in certain years, rapidly growing premiums in some parts of the country. And some areas faced underinvestment in important administrative functions, including outreach and advertising and enrollment assistance.

Read the full report here.

Key Design Components and Considerations for Establishing a Single-Payer Health Care System

Key Design Components and Considerations for Establishing a Single-Payer Health Care System

This report describes the primary features of single-payer systems, and it discusses some of the design considerations and choices that policymakers will face as they develop proposals for establishing such a system in the United States. The report does not address all of the issues involved in designing, implementing, and transitioning to a single-payer system, nor does it analyze the budgetary effects of any specific proposal.

Read the full report here.