UC Berkeley leaders propose ‘Golden Choice’ state public health insurance option
On Friday, members of the University of California Berkeley’s School of Public Health hosted a presentation about a recent research study on a proposed public option health insurance plan, called “Golden Choice.” The plan is designed to increase market competition and improve the affordability of coverage over time.
The study was conducted by school faculty Richard Scheffler, PhD, distinguished professor emeritus of health economics and public policy, and Steve Shortell, PhD, Blue Cross of California distinguished professor of health policy and management emeritus and dean emeritus.
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“Our proposal and our plan here is unique in the sense that it builds on the foundation of the delegated model in California, where providers accept full or partial risk, and they are paid to do that—they accept a capitation rate, which is generally risk adjusted,” Scheffler said.
The Golden Choice plan would leverage the delegated risk model of California’s healthcare delivery system, which allows insurers to transfer some or all of the risk of the costs of providing care to medical groups and independent practice associations, or IPAs.
According to the brief, which was published on Friday morning, California’s medical groups and IPAs have extensive experience in operating under delegated risk models. These groups receive a risk-adjusted per member per month payment for each enrollee, which provides organizations with a predictable cash flow to develop innovative care models, while also improving patient care.
While many hospitals and physicians in the state already accept full risk for the total cost of care, others accept only some professional risk or solely fee-for-service payments. The brief findings show that full-risk provider organizations have significantly lower total costs of care and higher quality of care scores than fee-for-service provider organizations.
Costs of healthcare within the state have spiked, with family premiums increasing 251% from 2000 to 2021, during which time the average weekly pay only saw a 100% increase.
“The short story is that health insurance premiums, family premiums, have gone up two-and-a-half times faster over this period than wages of workers in California,” Scheffler said, adding that recent inflation has merely added to the issue. “Even with insurance, it often costs too much with copayments and deductibles.”
Scheffler cited a recent study by the California Health Care Foundation, which found that 52% of respondents skipped or postponed medical care due to costs. Furthermore, 52% of respondents who are low-income reported having medical debt, compared to 28% for other populations.
“Over half of the Latinos, and almost half of the Black population has medical debt, so you can see the deep disparities in the way the healthcare system cuts across populations,” Scheffler said.
In the study, researchers assessed Golden Choice’s competitive impact on insurance premiums within the 19 Covered California health insurance markets, and found that Golden Choice would have the lowest premiums in 14 of the 19 regions. The study also found that within these 14 regions, $243 million would be saved per year, which equates to $1,389 savings per year per projected enrollee.
“We constructed a premium based on IHA [Integrated Health Association] data to test this model in the 19 regions in Covered California,” Scheffler said.
To predict whether the public option would create competition against commercial plans, researchers compared the silver premiums of exchange plans to the average total cost of care per member for Health Maintenance Organization enrollees within the IHA database.
The researchers also increased the Golden Choice premium estimates by 5% and then 10%, which did not alter the plans’ rankings. The prototype premium was found to be the second lowest premium on the exchange.
“In the three regions, they were the second lowest,” Scheffler said. “As you know, it’s very important to be the lowest of the second lowest, because that matters where most of the enrollment goes.”
During the presentation, Shortell noted that Golden Choice would have a substantial competitive impact on the cost of health insurance and the rate of premium growth in California. The research team invited proposals from providers who are interested in experimenting with the Golden Choice public option, and aims to connect with CalAIM, which seeks to advance and innovate Medi-Cal, in the future.