Payor Participation in Washington’s Public Option Plan and Impact on Premiums
On Thursday, July 2, 2020, the Washington Health Care Authority (HCA) announced that five insurance carriers (of the 15 health insurers that filed 2021 rates for individual health plans) are apparently successful bidders (ASBs) for the Cascade Care public option:
Bridgespan Health Company
Community Health Network of Washington
Coordinated Care Corporation
LifeWise Health Plan
UnitedHealthcare of Oregon
Notably, Community Health Network of Washington and United Healthcare of Oregon did not participate in 2020 and will only offer the public option.
HCA notes that the ASB’s proposed coverage plan includes “nearly every Washington county.” In the coming months, the Office of the Insurance Commissioner (OIC) will review and approve the health plan filings and the HCA will execute contract negotiations and final review. The Washington Health Benefit Exchange (HBE) Board of Directors is also expected to certify the plan offerings by September.
Background
As required by Senate Bill 5526 (Cascade Care), the Washington State Health Care Authority (HCA) must contract with at least one carrier to offer a public option plan at each of bronze, silver, and gold tiers of coverage in at least county in 2021. While the law states a goal of ensuring at least one of the public option plans is available in each county, HCA is only obligated to stand up one plan (available at each of the metal levels) in a single county.
SB 5526 also established standardized plans, which are statutorily required to adhere to plan designs finalized by the HBE. These plans offer lower deductibles, more services available before the deductible, and more transparent cost-sharing. Standardized plans must also allow consumers to easily compare plans by premium, network, quality, and customer service. Public option plans are required to be standardized plans and must comply with additional standards that include increasing transparency, reducing administrative burden, and aligning with state value-based purchasing models.
Analysis
Geographic Availability
As illustrated in the table below, the ASBs are offering the public option plan in select counties – leaving out 19 counties, including all five counties in rating area 8. Whereas, six counties (Adams, Garfield, Kittitas, Pierce, Whitman, and Yakima) will be able to choose a public option plan from multiple carriers, pending HCA approval. Adams and Kittitas will each have three carriers offering Cascade Care, while Garfield, Pierce, and Whitman will each have two carriers. One public option plan will be available in King County, which includes Seattle.
The absence of public option plans in 19 counties indicates that Washington State may fall short of its vision of widely offering Cascade Care across the state, at least in its first year – a possible scenario alluded to by Governor Jay Inslee on May 19.
In a letter to Sue Birch, Director of the HCA, and Pam MacEwan, CEO of the Washington State Health Benefit Exchange (HBE), Governor Inslee lowered expectations for the anticipated rollout of the nation’s first public option program, due largely to the impact of the ongoing COVID-19 pandemic. He stated, “While Cascade Care may take a preliminary approach in its initial year, we fully expect it to flourish in future years.” Governor Inslee’s announcement came days before the Phase 2 response deadline (May 22, 2020) of the Cascade Care request for applications (RFA).
Premiums
Overall, standardized public option plans (SP) are not necessarily the least expensive plan option in comparison to standardized non-public option plans (SN) and non-standardized plans (NS). Non-standardized plans were generally the least expensive options with carriers’ average silver-level premiums ranging from $532.78 to $681.24.
Monthly premiums for silver-level public option plans, on average, range from $558.23 to $680.42. The table below details the average monthly premiums provided in the proposed rate filings for 2021.
The variation in plan premiums may indicate a convergence of several factors, including competition at the county level, the coverage mandates that apply to SP and SN plans (but not NS plans), and provider participation. The required cost controls on provider reimbursement, coupled with the lack of a provider mandate, appear to limit provider participation in public option plans.
Affordability implications of public option plans vary at the county level. In counties where there is only one other standardized plan available in addition to a public option plan, public option plan premiums are the lowest available (see, e.g., Clallam and Cowlitz County in Appendix A). This remains true in some counties where plan competition is only slightly less limited (i.e., only three plans including a public option plan; see, e.g., Douglas and Okanogan County).
However, in counties where there is greater plan competition, or where carriers offer standardized plans at competitive rates, public option plan premiums are often neither the most expensive nor most affordable (e.g., Asotin, Garfield, and Whitman County). In rare cases (e.g., King County) the public option plan offered is the most expensive of the five total plans available. In general, it appears that public option plans will provide the most cost relief in counties where competition is currently limited and where, perhaps as a result, premium prices are higher.
Please note we examined plan rates for 40-year-old non-smokers at the silver level among standardized plans. This is in alignment with the Washington State Cascade Care RFA, which required carriers to provide the planned premium rates for this enrollee demographic.
Please find Appendix A here.
With the support of Arnold Ventures