The most aggressive move in establishing a public health insurance option at the state level came in late April, when the Washington legislature passed a bill to create standardized health plans in the state’s Affordable Care Act (ACA) exchange. Those plans will contract directly with the Washington Health Care Authority at Medicare-based rates.
The radical part of the new legislation is its integration of public-sector payment rates into the commercial market, capping the total amount paid, excluding pharmacy benefits, at 160% of what Medicare would pay for the same services.
Perhaps no state has more varied innovation efforts underway than Colorado, where ACA benchmark premiums for second-level Silver plans have increased by 71% since 2014. Medicaid covers 22% of the state’s population and accounts for a third of the state budget, and several of the state’s rural counties have the highest per capita healthcare costs in the nation.
An initial feasibility study for a Medicaid buy-in product showed a 28% reduction in premiums by using Colorado’s existing Medicaid infrastructure and paying the state’s hospitals at Medicare rates.
As a result, a proposal for a statewide public option is under development in the legislature. The goal is to have a public option in place by 2020 that will improve:
- Consumer affordability
- Market access and competition
- Market coverage and alignment
Given that a report on Colorado insurance costs in 2017 showed almost all marketplace plans spent more on medical costs than they received in premiums, the health plan industry has said a public option can’t work without a reduction in costs. To address this concern, the legislature has other reform initiatives underway, including an ACA Section 1332 waiver to establish a statewide reinsurance program. The program is designed to aid insurers — and keep premiums affordable — by paying an average of 60% of enrollees’ claims between $30,000 and $400,000.
The Centers for Medicare & Medicaid Services recently notified Colorado, along with North Dakota, that its 1332 waiver for a statewide reinsurance program was accepted, less than a few weeks after submission. Colorado and North Dakota will join Alaska, Maine, Maryland, Minnesota, New Jersey, Oregon and Wisconsin as states with reinsurance programs. In those states, ACA-premium costs decreased by approximately 20% on average in the first year of the reinsurance program.
In addition, Colorado hospitals will face new scrutiny of their pricing. Gov. Jared Polis signed House Bill 1001 in March requiring hospitals to submit annual reports tracking their charges and expenditures.
Another bill under consideration is designed to protect Colorado consumers from surprise billing. The bill proposes payment limits for out-of-network providers of emergency services to covered individuals, and for services provided by out-of-network physicians at an in-network facility.
Other notable healthcare reform efforts can be found in states such as:
Minnesota. Legislators have reintroduced a bill to allow individuals above 201% of the federal poverty level to buy into the state’s Medicaid plan through a Medicaid-like product on the marketplace. Minnesota has also received a 1332 waiver to allow federal pass-through funding to finance the state’s Premium Security Plan, a program to reimburse health plans for high-cost cases.
New Mexico. The state legislature has tasked its Health and Human Services committee with studying the various options for a Medicaid buy-in, which could be funded through a combination of ACA marketplace savings and tax credit transfers made possible by a 1332 waiver. New Mexico also is in the process of developing a reinsurance plan to reimburse health plans for high-cost claims.
Iowa. The state is seeking to restructure coverage offered on the ACA marketplace and establish a reinsurance program that would reimburse insurers for 85% of claims between $100,000 and $3 million and 100% for claims above $3 million.
Delaware. The legislature is studying four major options: expanding Medicaid Title XIX to higher incomes; creating a low-cost, ACA-marketplace-based product; developing a reinsurance program through a 1332 waiver; and enabling individuals to buy into the state-employee group health insurance program.