New York: Public Option Program

New York: Public Option Program

Upshot

• Democratic state legislators introduced A. 10644 to establish a public option program in New York.

• New York operates a robust individual market with 12 plans participating on the state-based Marketplace. The state also features certain consumer protections and affordability measures, including a Basic Health Program. 

• The bill was introduced by a Democratic Senator in August 2022, though this was after the end of the state legislative session. It was then referred to the Committee on Health. The bill is expected to be reintroduced during the next legislative session in 2023.

Background

New York operates one of the most robust individual health insurance markets in the U.S. Twelve carriers offer individual market plans in 2022. On average, premium rates increased by 3.7 percent in 2022. New York has implemented several changes to support individual market consumers. Highlights include:

• Actuarial value: New York requires plans to have a higher actuarial value than what is required by federal government regulations. This means that plans in New York must generally cover a larger share of medical expenses for their enrollees as compared to what they would otherwise have to cover under standard federal requirements. See a comparison below.

• Plan requirements: New York requires health insurers to continue offering plans on the Marketplace in order to keep their Medicaid, Basic Health Program, and Child Health Plus contracts. In other words, participating in the Marketplace is a requirement for plans to participate in Medicaid, CHP, and Child Health Plus. Insurers must also offer one standard plan design in each metal tier and may offer up to three non-standard plan designs for each metal level.

• Pregnancy: New York offers a special enrollment period for pregnant people, meaning that becoming pregnant is considered a qualified event for enrolling in an individual Marketplace plan.

While not directly related to the Marketplace, New York also operates a BHP program. This program allows the state to offer affordable health coverage for consumers between 138 and 200 percent FPL, as well as for consumers with incomes below 138 percent FPL who are lawfully present in the U.S.

Summary

The bill would establish a public option program in New York. This means that the state would be required to establish and administer a program to provide a comprehensive health insurance coverage option to compete alongside private health insurers in the state. Additional details follow.

• Board: The bill would create the board of the New York State public health care option program. At the request of the commissioner, the board would develop and submit recommendations related to the implementation of the program. The board would consist of 13 appointed trustees and would meet at least four times each year. Within one year of enactment, the board would be required to submit specific recommendations on whether any additional revenue, taxes, or assessments are necessary to implement the program.

• Premiums: The commissioner would be required to establish premiums that ensure the viability of the public option program but that maximize affordability for members. Premiums would be adjusted based on household size and income. The commission would also set benchmark goals for premiums that would aim to be below comparable commercially available plans. 

• Eligibility: Every resident in New York would be eligible to enroll in the public option program.  Those with employer-sponsored insurance would be eligible to purchase coverage through the program as well. However, doing so may not make sense financially because of the employer coverage firewall that prevents people with access to affordable employer-sponsored coverage from receiving federal premium tax credits. The commissioner would specifically be directed to develop an enrollment process for employers with less than 100 employees to participate in the program.

• Payment rates: The commissioner would develop payment methodologies and rates for health care services furnished by participating providers, including a methodology for reasonable and customary fees for out-of-network health care services.

• Provider participation: Provider participation in the program would not be mandatory. The commissioner would establish criteria and standards for providers to be qualified for participation in the program as well as grounds for revocation.

The bill would also establish a “New York state public health care option program fund.” Funding would consist of all revenue received through premiums, co-insurance, or other related fees from enrolled members, as well as any federal payments received, or state funds transferred to the fund. All funding would be expended for the purposes of operating the public option program.

New Jersey: Public Option Program

New Jersey: Public Option Program

Upshot

• Democratic state legislators introduced legislation for the third time to establish a public option program in New Jersey, though the S. 1428 was not ultimately passed. The program would have required the state to establish its own health insurance plan to be offered on the state-based Marketplace.

• New Jersey operates a fairly robust individual market with four insurers participating on the Marketplace in 2022. The state also features certain consumer affordability programs that offer additional subsidy supports to households with annual incomes up to 600 percent FPL. These subsidies are on top of those provided by the federal government. 

Background

New Jersey features a fairly robust individual market. As of 2022, four issuers offer plans on the state’s Marketplace and approximately 311,692 individuals enrolled in individual market plans (a record high for the state). In 2018, New Jersey was one of two markets in the U.S. to gain a new insurer in their Marketplace. Notably, the state enacted its own individual mandate in 2019 that requires all residents to carry health insurance or otherwise pay a fine.

The state also featured lower-than-average premiums compared to others in the northeast region in 2018. In 2019, premiums then decreased by an additional 9.3 percent, though increased the next year in 2020 by 8.7 percent – considerably larger than the national average. Premium increases appeared to stabilize thereafter in 2021 with an average premium increase of 3.3 percent.

New Jersey enacted measures in 2020 to make Marketplace plans more affordable. Since 2021, the state began conducting state-based assessments on individual and fully insured large group health plans, which are expected to generate $224 million in annual funding. Approximately a third of the funding will be used to finance the state’s reinsurance program, which helps fund insurance coverage for Marketplace consumers with high health care costs in the state. The remaining two thirds will make health insurance more affordable via state-funded premium subsidies for households earning up to 600 percent FPL.

More recently, New Jersey passed legislation earlier this year that creates the New Jersey Easy Enrollment Health Insurance Program.  The program will make it easier for residents to obtain health insurance through the state’s Marketplace. Uninsured and underinsured residents will now be able to indicate on their tax return or through their unemployment insurance benefit claims whether they are interested in obtaining health insurance coverage. The state will then proactively connect with qualifying residents to facilitate their enrollment into a Marketplace plan. The legislation took effect immediately upon passage and will apply to returns filed for taxable years beginning after December 31, 2022.

Summary

The bill would establish a public option program in New Jersey. This means that the state would be required to establish and administer a program to provide a comprehensive health insurance coverage option to compete alongside private health insurers in the state. Notably, the bill does not direct the program to contract with private insurance companies to administer the plan. Additional details follow.

• Board: The bill would create the New Jersey Public Option Health Care Board to advise the Commissioner of Health to implement the public option program. The board would include members across a range of stakeholder groups – including representatives of consumer advocacy organizations – and would meet at least four times each year.

• Premiums: The Commissioner of Health and Commissioner of Banking and Insurance would establish premiums. Premiums must be determined in a manner to make the program viable but at the lowest possible cost to members.

• Eligibility: Every resident in New Jersey would be eligible to enroll in the public option program. This would be true even for individuals who are otherwise eligible for NJ Family Care, Medicaid, Medicare, and other public health insurance programs in the state. Those with employer-sponsored insurance would be eligible to purchase coverage through the program as well. However, doing so may not make sense financially because of the employer coverage firewall that prevents people with access to affordable employer-sponsored coverage from receiving federal premium tax credits.

• Payment rates: The Commissioner of Health would establish payment methodologies for health care services. The program would allow for a variety of different payment methodologies, including those established as part of a demonstration (e.g., value-based payment arrangements). All payment rates would be required to be reasonably related to the cost of efficiently providing health care services and assuring an adequate and accessibly supply of health care services. The program would be required to engage in “good faith” negotiations with health care providers to establish payment rates and methodologies.

• Provider participation: Provider participation in the program would not be mandatory. In general, providers who are qualified to participate in Medicaid, NJ FamilyCare, or Medicare would be qualified to participate in the public option program. The Commissioner of Health would be required to establish formal procedures and standards for providers to be qualified to participate in the program.

The bill would also establish a “New Jersey Public Option Health Care Trust Fund,” whose funding would only be used for the purpose of supporting public option program activities. Funding would be generated through premiums, payments as a result of any federal waivers that generate savings, and other such revenue sources.

Massachusetts: Public Option Program

Massachusetts: Public Option Program

Upshot

• Democratic state legislators introduced for the second time a bill to establish a public option program in Massachusetts, S. 787, though the bill was not ultimately passed. This suggests continued interest among Democrats in advancing these policies in Massachusetts.

• The program would require the state to establish its own health insurance plan to be offered on the Marketplace for the individual and small group markets. It would include certain features to ensure consumer affordability and would not require providers to participate.

• Massachusetts operates a competitive individual market with robust plan participation and consumer affordability features already. Massachusetts is progressive on its reform agenda and has introduced other health insurance coverage reforms, such as legislation to establish a single payer system.

Background

Massachusetts has long been a leader in state-level health care reform. In terms of its individual market, it operates a state-based health insurance Marketplace called Health Connector. Massachusetts’ Marketplace has remained among the most competitive in the country, with eight carriers operating on the Marketplace in 2022.

Additional details of the state’s Marketplace include:

• Massachusetts offers a ConnectorCare program for individuals up to 300 percent FPL which provides additional state subsidies to lower-cost silver tier plans on top of existing federal subsidies.

• The state features a state-level individual mandate that requires all residents to carry health insurance or otherwise pay a state tax penalty.

• To further enhance the risk pool, the Massachusetts operates a “merged market” (i.e., an arrangement in which the individual and small group markets are combined under one market), which keeps non-group market premiums relatively stable by including small group lives in the same shared risk pool.

• Massachusetts standardizes plan benefit offerings in the Marketplace to facilitate an “apples-to-apples” comparison for consumers shopping for coverage.

Marketplace average benchmark premiums have consistently been among the lowest since 2014, though have risen in recent years. Average per member per month premiums – which accounts for plans across all metal tiers and not just silver-tier plans – were the lowest in the nation in Massachusetts in 2017 and 2018.

Summary

The bill would establish a public option program in Massachusetts. This means that the state would be required to establish its own health insurance plan to be offered alongside other commercial plans in the individual and small group markets, as well as eventually in the large group market. Additional details follow.

• Contracted plans: The state would initially be authorized (though not required) to contract with Medicaid managed care organizations to administer the public option program. Eventually, the state would be permitted to contract with non-Medicaid managed care organizations.

• Premiums: The state would establish premium rates for the public option program. Rates would have to be sufficient to cover the costs of the health benefits provided by the public option as well as the administrative costs related to operating the public option.

• Payment rates: Payment rates for covered services would be based on provider payments under Medicare Parts A and B. The state would have leeway to determine the extent to which the base Medicare rates should be adjusted to reimburse providers and medical device manufacturers.

• Provider participation: Medicare participating providers would participate in the public option program by default. However, the state would establish an opt-out process for providers who do not wish to participate. Providers who do opt out would not face any penalty and would have the opportunity to opt back in if they so choose. The state would establish a process for all providers to participate in the program if they so choose.

• Risk adjustment: Risk adjustment is how payers estimate the cost of insuring a patient population based on their projected costs due to underlying risk factors (e.g., age, level of disease, etc.). The state would be required to assess the average “actuarial risk” of all enrollees (i.e., an estimate for how expensive it would be to insure the average enrollee). Self-insured group health plans would be exempted from this analysis. The state would then compare the actuarial risk of each health plan’s enrollees against the average actuarial risk of all enrollees. For health plans whose enrollees have an actuarial risk that is higher than the average actuarial risk of all enrollees in all plans for a year, the state would provide a payment to those plans based on a calculation to be determined by the insurance commissioner.

The bill would also establish a “Public Health Insurance Option Trust Fund,” which would have funding credited to it for operation of the public option program. The bill did not specify the revenue source for the trust fund.