State lawmakers offer advice on creating a federal public option

Three legislators pursuing public options at the state level offered lessons learned during a recent conversation at the 2021 State of Reform Federal Health Policy Conference. The three lawmakers – Sen. David Frockt (WA), Sen. Matt Lesser (CT), and Rep. Dylan Roberts (CO) – are at different stages in establishing and pursuing public options in their states.

The panelists also came to the conversation having negotiated with state stakeholders to create public option proposals, with the end result being considerable variation between the plans.

Leveraging their knowledge at the state level, the three panelists offered advice to the Biden administration and other interested states on the most important considerations for a public option.

 

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Washington State passed its public option bill, referred to as Cascade Care, in 2019. The bill required the creation of standardized health plans on the state exchange, established “Cascade Select” public option plans, and directed the Washington State Health Care Authority to develop a subsidy plan to lower premiums on the individual market. The legislation set the Cascade Care rate reimbursement cap for providers in aggregate at 160% of Medicare.

During the open enrollment period beginning November 2020, five carriers offered public option plans on the exchange.

Frockt says one of the most challenging aspects of enacting the public option is that some plans have had a difficult time getting providers and major hospital systems into their networks. In response, the Washington State Legislature is pursuing a bill that will establish network participation requirements in public option plans for major hospital systems.

“The challenge that we’ve got right now in Cascade Care is we don’t have enough network coverage. We do have public option plans in 19 of our 39 counties; we think we can get them in at least 9 or 10 more quickly and I think there’s potentially more.”

When asked about what advice he would give to other states or the federal government in setting up a public option, Frockt says the real question is how consumers are impacted. He says the overarching goal is to get more people into lower cost health plans.

“To me the real question is: what is the premium experience for people who are buying? From my standpoint, I’m less concerned about how much doctors are getting paid for a particular service or not.  That’s part of the equation but…I really don’t care if it’s 170% of Medicare, or 190% of Medicare, or 200% as long as the premium experience for the consumers on the individual market is reasonable.”

Rep. Roberts introduced public option legislation last year, but the bill was put on hold after Colorado shut down in response to the COVID-19 pandemic. This year, he says they went “back to the drawing board” and created a two-phase approach that could put the state on the path toward a public option.

Phase I would put in place a goal for the health care industry to lower premiums by 20% by the end of 2024. If the industry is able to achieve the 20% reduction, they won’t move to Phase II. If they are unable to meet that goal, Roberts says the state would put in place a non-profit, quasi-governmental entity to offer an insurance product on the individual and small group market no sooner than 2025.

“We’re happy and confident about this because it’s an innovative, two-phase approach which will give the health care industry the time and the space to demonstrate to us what they say all of the time – that they know costs are too high and that they would like to be part of the solution.

And we’re going to give them a full two and a half years to take them at their word on that and see if we can find lower prices. But if we can’t then the state of Colorado would come in and create a public option.”

The Colorado bill had its first public hearing last week.

Both Roberts and Frockt say a national public option would be preferable to individual state programs. There are limitations to what a state can do, Roberts says, and a national option would remove some of the complications and intricacies of individual state plans.

President Biden campaigned on creating a public option but has yet to publicly announce concrete plans or a timeline for its creation.

Frockt advised that the president should act as quickly as possible while he has the political support in Congress.

“The more you can get in place as quickly as possible, the harder it will be to take away.”

Frockt says he’s hopeful Biden will pursue a public option after his infrastructure package.