In the wake of the COVID-19 pandemic and with the end of the Public Health Emergency (PHE) on the horizon, state policymakers are exploring options to expand healthcare coverage with several spearheading a move towards a public health insurance option.
Generally defined, a public option plan is created and administered by the state. It is designed to compete with private health insurance plans in the marketplace and offers benefits comparable to Medicare. The increased competition could lead to expanded healthcare access and lower costs for plans—a win for the state and for consumers. Currently, Washington state, which operates its own state-based exchange, is the only state to have enacted a public option and can serve as a case study for others considering the same path.
While Washington state officials designed the public option plan, it is offered by private insurance carriers. Residents who purchase a policy on the state’s marketplace can choose to sign up for the public option plan and may, depending on income, be able to lower the cost through federal subsidies. Two years in, the state is starting to find its footing while addressing the challenges that have arisen. During the most recent open enrollment, sign-ups for Cascade Care increased from 35,000 to 80,000 customers, including 8,500 who chose the public option. State policymakers attribute the lower numbers to lack of hospital participation due in part to low payments and policies linking reimbursement to Medicare rates. But the state legislature passed a measure last year mandating hospitals’ participation if public option plans were not available in all counties in 2022.
These learnings could be invaluable for Colorado, which recently had its waiver to create a public health insurance plan for residents that would be available through the state’s Affordable Care Act (ACA) exchange approved. The “Colorado Option” would compete against private plans on the state’s insurance exchange with premiums that are 22.3% lower on average. By 2027, an estimated 32,000 Coloradans could gain health insurance coverage through the public option.
Other states operating state-based exchanges (SBEs) have gravitated in the same direction—Nevada’s Governor Sisolak signed legislation authorizing the state to establish such a plan, and Minnesota, New Hampshire, and Wisconsin have expressed interest as well. Oregon Governor Kate Brown also signed a bill charging state agencies with developing a plan for a public option which was released earlier this year by the Oregon Health Authority (OHA) and the Department of Consumer and Business Services (DCBS). Their report detailed steps to implement “an affordable, comprehensive, on-Marketplace public option that has low cost-sharing and robust benefits…”
However, the report notes that a public option may not be possible without the state transitioning from a state-based exchange on the federal platform (SBE-FP) to a full SBE. Operating as an SBE “would further the implementation and accessibility” of the public option and provide Oregon “an opportunity to generate some savings compared to current federal user fees.” The report also details additional benefits of a full SBE, including more robust data collection, enhanced consumer shopping tools and customer services, and the ability to extend open enrollment periods—all of which give the state more autonomy and flexibility than it currently has as an SBE-FP.
Transitioning to an SBE will bring these benefits and more to states, regardless of whether they are pursuing a public option or not. For those states that are, one thing is clear: an SBE is the key to opening the door.
