Model Process and Timeline for State Public Option Implementation
Standing up a public option program at the state level is a resource- and time-intensive process, requiring stakeholder buy-in and political capital. Here we outline the anticipated timeline and iterative process for a state to institute a public option program from conceptualization to deployment and evaluation. While the steps are presented in a linear fashion, certain steps may need to be repeated or implemented simultaneously.
This document is intended for state policymakers, including both state legislators and state government officials. Given the variation in state political landscapes and policy priorities, the document is not intended to be one-size-fits-all. Instead, the document offers a model process and timeline that can be molded to fit a state’s needs. Timelines may vary widely due to legislative calendars, political dynamics, and other state-specific factors.
Of note, a multifaceted stakeholder engagement strategy should be employed in tandem with the process of developing, implementing, and evaluating the public option program. Establishing and nurturing strong partnerships with stakeholders and state legislators (ideally bipartisan and bicameral, where feasible) early in the process, particularly before state legal authority is pursued, would likely bode well for passing the intended legislation. A forthcoming model stakeholder engagement strategy will be available here.
Model Timeline
This chart summarizes each phase of the process and notes timing, which may vary by state, for each step (i.e., target date, duration). A more detailed description of each step is provided further below this introductory overview.
Model Process
Phase 1: Conceptualization and Design
1. Conduct an environmental scan to provide an overview of metrics and indicators to help take stock of the current insurance market and potential impact of a public option program. They include, but are not limited to:
Health insurance coverage (across employer-sponsored insurance, individual health insurance, Medicaid/CHIP, Medicare, uninsured);
Enrollment in the individual market, including a breakdown of individuals receiving premium tax credits or cost-sharing reductions;
Trends in health care spending, including premiums and cost-sharing (across households by income group; employers; state government, federal government; and hospitals);
Competition in the health care marketplace;
Provider network adequacy;
Actuarial analysis to determine target reimbursement, impact on subsidized population, and enrollment changes across markets;
Potential impact of the public option program on enrollment, premiums, premium tax credits, and federal-pass through savings; and
Expected hospitals reimbursement rates.
The environmental scan is intended to identify the underlying problem and aid in the development of a draft problem statement. If necessary, the state may have to pursue legal authority and/or funding to conduct an environmental scan.
2. Convene stakeholders and thought leaders to collect feedback on the draft problem statement, amending it, if necessary, as well as to discuss how a public option program could be designed to address the identified problem. The discussion should focus on establishing the goals of the public option program. Engaging a diverse group of stakeholders, representing different – and even conflicting – interests (e.g., insurance carriers, providers, consumers, employers, brokers, advocates, and potential state legislation sponsors) early in the process will help facilitate successful implementation of a public option program. In addition, engaging federal officials from the Centers for Medicare and Medicaid Services (CMS) may be particularly helpful if the state intends to pursue a federal waiver.
3. Complete the public option decision tree to guide the design of a draft public option program proposal. This exercise is intended to provide the state with a detailed blueprint to develop legislation authorizing the public option program, as well as help navigate the regulatory decision-making process.
4. Engage the public through listening sessions and public comment opportunities to solicit feedback on the draft public option program proposal. Public listening sessions should be conducted across the state. Creating a process for the lead state agencies to respond to comments, providing rationale as to why specific recommendations or considerations were or were not incorporated would help promote transparency throughout development. The output of this iterative process should be a more fully fleshed out public option program proposal that reflects stakeholder feedback.
Phase 2: Pursuing Legal Authority
5. Draft legislative text based on the public option program proposal. While the public option decision tree is intended to resolve a bulk of the policy decisions, this step may pose new questions or require specific policy decisions to be revisited. Therefore, the development of legislation should be a collaborative process, involving the state legislators who would sponsor the bill (ideally bipartisan and bicameral); the state agency(s) who would be responsible for implementing the bill; and stakeholders who would be affected by the bill (particularly stakeholders who were engaged during the first phase). Crafting the bill in a collective and transparent manner would help minimize pushback, as well as reduce the likelihood of significant changes to the legislation (in the form of amendments) as it moves through the legislative process. The goal of this phase is to secure the state legal authority to create a public option program and codify core design elements.
6. Collect feedback on draft legislation from other state legislators, constituents, and federal officials. A formal process for constituents to submit comments (like the process used in the first phase) would further underscore the collaborative and transparent approach to crafting legislation. In addition, this process should include an opportunity for lead sponsors to respond to feedback, providing rationale as to why specific recommendations or considerations were or were not incorporated.
7. Lead sponsors introduce legislation to the state legislature. Accompany the formal introduction of the bill with a public awareness campaign (including a suite of plain language materials that explain how the legislation would affect consumers, providers, and insurance carriers) as well as outreach events to help increase understanding and build support among the public.
8. Committees of jurisdiction convene hearings to examine the legislation and hold markups. The hearings would provide another opportunity for the lead sponsors to collect feedback and build support for the bill. In addition, the hearings would likely provide opponents (including state legislators and stakeholders) an opportunity to publicly criticize the public option program. The state and its allies should be prepared with counterarguments to bolster the argument for a public option program. As noted earlier, the state and its allies would need to continue its robust advocacy strategy, including individual outreach to Committee members, to ensure the bill is favorably reported to the chamber.
9. Each chamber passes legislation and Governor signs legislation into law. Throughout this step, the state and its allies would need to continue its robust advocacy strategy, including individual outreach to Committee members, to ensure the bill is passed by each chamber and sent to the Governor’s desk for signature.
Phase 3: Deployment
10. Implement state law through the rulemaking process, which would include opportunities for public comments. This process typically consists of four stages: (1) notice to the public about proposed rulemaking; (2) opportunity for public comment; (3) public hearing; and (4) final adoption of the rule. While the state law authorizing the creation of a public option program would determine the program’s major components and guardrails, state regulations would be needed to establish more specific requirements and aspects of the program. For example, the state may be required to issue rules that establish the conditions of participation for providers and insurance carriers. These conditions could include requiring insurance carrier participation through a penalty process or developing a hospital reimbursement formula.
11. Pursue federal waiver application process if desired for additional flexibility or federal pass-through funding. For the purposes of designing and implementing a public option program, a state may leverage the following three authorities for added flexibility: (1) State Innovation Waivers under Section 1332 of the Affordable Care Act (ACA) through which states may alter requirements in individual and small group insurance markets and receive pass-through funding; (2) the delivery and payment reform models for Medicare and Medicaid conducted by the Center for Medicare & Medicaid Innovation (CMMI), as authorized under ACA Section 3021; and (3) waivers under Section 1115 of the Social Security Act that allow states to test and evaluate state-specific policy changes in Medicaid and the Children’s Health Insurance Program (CHIP).
Pursuing a federal waiver typically entails gathering data (publicly available data and/or data requested from insurers) and conducting an actuarial and economic analysis – all of which may require considerable preparation and time. Prior to submitting a completed federal waiver, a state would be required to provide the public with an opportunity to comment on the application through a formal public comment process (30 days minimum and two public hearings). CMS would be available to provide technical assistance on the application to help ensure approval. A state is encouraged to explore federal waivers when completing the policy decision tree (see Phase 1).
12. Procure insurance carriers that will offer public option plans on the individual market (if applicable). This step would be required if the state decides that a private insurance carrier, rather than a state agency, will issue the public option plans. If so, the state would issue a request for application (RFA) for carriers interested in offering public option plans on the individual market.
13. Insurance carriers submit standard bids and rate filings. Depending on state policy, rate filings are submitted to either the state or Federal government for approval to participate in a State-based Exchange (SBE) or a Federally-facilitated Marketplace (FFM), respectively. Insurance carriers seeking to participate in an FFM would be required to obtain Qualified Health Plan certification.
14. Announce availability of public option plans. The public announcement should detail which carriers were selected to offer public option plans and provide information on premiums and other cost-sharing for each plan. The information should be presented in a way that allows consumers to compare benefits and out-of-pocket costs across different plans (including public option plans and non-public option plans). The announcement should be accompanied by an outreach campaign to increase public awareness. In addition, collaborating with navigator organizations that received federal funding for enrollment, outreach, and public education activities to help increase understanding about the public option plans could help facilitate enrollment in the public option plan.
15. Participate in the Open Enrollment Period. Eligible residents will be able to enroll in the public option plan offered on either the SBE or FFM. While the open enrollment period for an FFM is November 1 through December 15, states with SBEs have the flexibility to set their own open enrollment period dates. If the public option is pursued through a Medicaid expansion waiver, eligible residents can apply for Medicaid benefits beginning January 1.
16. Coverage start date. Coverage offered through the public option plans would be effective. The state should continue to monitor implementation of the public option program (See Phase 4).
Phase 4: Evaluation
17. Evaluate the impact of the public option program on health insurance coverage, health care spending, competition in the health care marketplace, and other quality and affordability metrics – particularly those measured in the initial environmental scan. These metrics should be compared to metrics collected as part of the environmental scan (i.e., pre-public option) as well as national-level metrics. Regarding timing, metrics should be collected and analyzed on a regular basis (weekly or monthly). A formal and actionable evaluation should be conducted after enough time has passed (potentially three months). It should be completed in time to allow the state to make program adjustments and allow insurance carriers to modify their public option plans, if necessary, before approval must be obtained to participate in an SBE or FFM. Specific timing depends on the design of the public option program and/or duration of the contract with insurance carriers. In addition, a state may be required to evaluate implementation of its federal waiver, if approved. Evaluation results should be released in a public report.
18. Solicit feedback from the public and stakeholders. Like in Phase 1, public listening sessions should be conducted across the state and open to a diverse group of stakeholders, including individuals and entities directly affected by the public option plan (e.g., public option plan enrollees, insurance carriers offering public option plans, providers participating in the public option plan).
19. Incorporate feedback into the design of the public option program in forthcoming years. The state can make changes to the public option program two main avenues. The state can modify the program through the rulemaking process. However, the scope of these changes would be limited to what is allowed under current law (see Step 11). Alternatively, the state could make more significant changes to the program by pursuing new legal authorities (see Phase 2). When contemplating changes to the public option program, the state should consider timing (e.g., how long will it take for the change to take effects) and potential obstacles to making those changes. For example, pursuing new legal authorities should ideally be pursued if the proposed change is politically viable.