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Washington passes 'public option'

Greenbeard

Greenbeard

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Washington state got some fanfare last week for being the first state to pass a 'public option.' Or at least something they're calling a public option. The bill went to Inslee, who is expected to sign it.

Historic public option healthcare bill passes Legislature, heads to Inslees desk
OLYMPIA, Wash. — Senate Bill 5526, a public health plan which would be known as Cascade Care is heading to Governor Inslee's desk.
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A bill passed April 27 by the Washington State Legislature would create a public option for health care coverage, available through Washington’s Health Benefit Exchange.

The plan would be known as Cascade Care, and would be the first public health insurance option in the nation.

Senate Bill 5526, sponsored by Sen. David Frockt (D-Seattle), and led in the state House of Representatives by Rep. Eileen Cody (D-West Seattle), will give Washingtonians who purchase healthcare coverage on the individual insurance market an option that would decrease the cost of premiums, copays and other out-of-pocket expenses.

Gov. Jay Inslee also supported the legislation, and worked with lawmakers throughout the process.
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What's interesting about this is that it gets at the murkiness between 'public' and 'private' in health insurance these days. Washington's "public option" is not actually a new government entity, nor any sort of publicly-operated insurance plan.

Instead, the Washington Heath Care Authority, the state's consolidated health care purchasing entity, will contract with insurers to sell plans in the state's marketplace that meet certain standards and that, most significantly, cannot pay health care providers like hospitals prices that are more than 160% of Medicare. That said, if those price restrictions don't actually result in lower premiums or the insurer can't build a provider network at those prices or if the insurer can lower its premiums 10% year-over-year some other way, then that 160% of Medicare requirement can be waived.

In other words, this 'public option' is just an exercise in the state government more aggressively purchasing certain private health plans via tougher contractual requirements. Structurally, it's a bit like the ACA's multi-state plans, in which the federal Office of Personnel Management contracts with insurers to sell plans in the marketplaces. The idea there, as in Washington's new approach, is to get more insurers selling in the marketplaces to boost competition.

That said, restricting the 'public option' insurers from paying health care providers more then 160% of Medicare is fairly novel, if it works.

Now does that mean it's not really a public option? That's the murkiness. Most people consider Medicaid to be public health insurance but in Washington, like most states, the state government just pays and contracts with private insurers to cover poor people. Their Apple Health Medicaid program relies on five private insurers and Medicaid enrollees choose their Medicaid plan using the same marketplace that higher-income commercially insured people under the ACA use to shop for their private plans.

At a certain point it all just becomes semantics.
 
Greenbeard said:
Washington state got some fanfare last week for being the first state to pass a 'public option.' Or at least something they're calling a public option. The bill went to Inslee, who is expected to sign it.

Historic public option healthcare bill passes Legislature, heads to Inslees desk



What's interesting about this is that it gets at the murkiness between 'public' and 'private' in health insurance these days. Washington's "public option" is not actually a new government entity, nor any sort of publicly-operated insurance plan.

Instead, the Washington Heath Care Authority, the state's consolidated health care purchasing entity, will contract with insurers to sell plans in the state's marketplace that meet certain standards and that, most significantly, cannot pay health care providers like hospitals prices that are more than 160% of Medicare. That said, if those price restrictions don't actually result in lower premiums or the insurer can't build a provider network at those prices or if the insurer can lower its premiums 10% year-over-year some other way, then that 160% of Medicare requirement can be waived.

In other words, this 'public option' is just an exercise in the state government more aggressively purchasing certain private health plans via tougher contractual requirements. Structurally, it's a bit like the ACA's multi-state plans, in which the federal Office of Personnel Management contracts with insurers to sell plans in the marketplaces. The idea there, as in Washington's new approach, is to get more insurers selling in the marketplaces to boost competition.

That said, restricting the 'public option' insurers from paying health care providers more then 160% of Medicare is fairly novel, if it works.

Now does that mean it's not really a public option? That's the murkiness. Most people consider Medicaid to be public health insurance but in Washington, like most states, the state government just pays and contracts with private insurers to cover poor people. Their Apple Health Medicaid program relies on five private insurers and Medicaid enrollees choose their Medicaid plan using the same marketplace that higher-income commercially insured people under the ACA use to shop for their private plans.

At a certain point it all just becomes semantics.
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I guess Washington state will find out health care is complicated. Not sure how many people they have in their individual plan to start with. Doubt they have the scale outside of major cities to even have a chance at success.

Sounds like a political stunt so politicians can say they addressed this issue.
 
washunut said:
I guess Washington state will find out health care is complicated. Not sure how many people they have in their individual plan to start with. Doubt they have the scale outside of major cities to even have a chance at success.

Sounds like a political stunt so politicians can say they addressed this issue.
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These are just private insurers that would sell in the market subject to the conditions of their contract with the authority, the goal being "to have a choice of qualified health plans under this section offered in every county in the state." Through 2016 every county in Washington had two or more insurers competing in its marketplace (indeed, through 2015 every county had three or more). During that period the average benchmark premium in the state dropped twice (from 2014 to 2015, and from 2016 to 2017).

Right now there are several counties with only one seller.

If they're successful, they'll bring competition back to every county. And the really public option-y component of the plan, the cap on prices that these sellers can pay health care providers, if it worked would put downward pressure on premiums by putting downward pressure on the provider prices that ultimately drive much of them.

ezgif-3-9816b3e9214c.gif
 
Greenbeard said:
These are just private insurers that would sell in the market subject to the conditions of their contract with the authority, the goal being "to have a choice of qualified health plans under this section offered in every county in the state." Through 2016 every county in Washington had two or more insurers competing in its marketplace (indeed, through 2015 every county had three or more). During that period the average benchmark premium in the state dropped twice (from 2014 to 2015, and from 2016 to 2017).

Right now there are several counties with only one seller.

If they're successful, they'll bring competition back to every county. And the really public option-y component of the plan, the cap on prices that these sellers can pay health care providers, if it worked would put downward pressure on premiums by putting downward pressure on the provider prices that ultimately drive much of them.

ezgif-3-9816b3e9214c.gif
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Not against the program just don't think it has a chance of being successful. Time will tell.
 
The new RAND report on the prices employers are paying hospitals puts that 160% of Medicare price cap into perspective.

Private payer rates in Washington look to be somewhere around ~240% of Medicare rates on average at present. So this 'public option,' provided it could build a hospital network that accepts it, could be paying 2/3 of what its competitors are paying for every claim it pays, on average. That would presumably give it a nice edge in the premiums it brings to the market.

The dotted line below represents the price cap in what the 'public option' payer would be paying out:

257lmhd.png
 
Greenbeard said:
Washington state got some fanfare last week for being the first state to pass a 'public option.' Or at least something they're calling a public option. The bill went to Inslee, who is expected to sign it.

Historic public option healthcare bill passes Legislature, heads to Inslees desk



What's interesting about this is that it gets at the murkiness between 'public' and 'private' in health insurance these days. Washington's "public option" is not actually a new government entity, nor any sort of publicly-operated insurance plan.

Instead, the Washington Heath Care Authority, the state's consolidated health care purchasing entity, will contract with insurers to sell plans in the state's marketplace that meet certain standards and that, most significantly, cannot pay health care providers like hospitals prices that are more than 160% of Medicare. That said, if those price restrictions don't actually result in lower premiums or the insurer can't build a provider network at those prices or if the insurer can lower its premiums 10% year-over-year some other way, then that 160% of Medicare requirement can be waived.

In other words, this 'public option' is just an exercise in the state government more aggressively purchasing certain private health plans via tougher contractual requirements. Structurally, it's a bit like the ACA's multi-state plans, in which the federal Office of Personnel Management contracts with insurers to sell plans in the marketplaces. The idea there, as in Washington's new approach, is to get more insurers selling in the marketplaces to boost competition.

That said, restricting the 'public option' insurers from paying health care providers more then 160% of Medicare is fairly novel, if it works.

Now does that mean it's not really a public option? That's the murkiness. Most people consider Medicaid to be public health insurance but in Washington, like most states, the state government just pays and contracts with private insurers to cover poor people. Their Apple Health Medicaid program relies on five private insurers and Medicaid enrollees choose their Medicaid plan using the same marketplace that higher-income commercially insured people under the ACA use to shop for their private plans.

At a certain point it all just becomes semantics.
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This is how it should be done rather than try to create a national system for 320 million people. I won't say whether it will work or not, but at least in compartmentalizes failure.
 
I think it would be far better if CA-OR-WA all worked on a tri-state bill together.
 
Checkerboard Strangler said:
Yes of course. A tri-state program would be more robust. A REGIONAL one would be even more so, if it was possible to collect more states.
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Maybe, but the hardest part for upstart insurers is negotiating competitive prices with health care providers. In this case, whichever insurer gets this contract with the state has a statutory limit on how high the prices it agrees to with providers can be. The hard part then is going to be getting providers to agree to be in-network at those prices, but having scale in other states is not going to help with that. Clout in that market will help, but some Seattle-based provider isn't going to care all that much if the insurer has customers in San Diego, too. What matters in that case is its position in Seattle.
 
Greenbeard said:
Maybe, but the hardest part for upstart insurers is negotiating competitive prices with health care providers. In this case, whichever insurer gets this contract with the state has a statutory limit on how high the prices it agrees to with providers can be. The hard part then is going to be getting providers to agree to be in-network at those prices, but having scale in other states is not going to help with that. Clout in that market will help, but some Seattle-based provider isn't going to care all that much if the insurer has customers in San Diego, too. What matters in that case is its position in Seattle.
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All true but again, the size of the overall risk pool is important because the larger the risk pool, the more stability.
 
I wonder how long until Washington State passes a State Income Tax to go with it.
 
And it's now law.

Washingtonians to get public option on state’s health-insurance exchange
OLYMPIA — Gov. Jay Inslee on Monday signed into law a bill that creates a public option for Washington’s health benefit exchange, a move intended to lower costs and boost insurance coverage across the state.

Sponsored by Democratic lawmakers and requested by Inslee, Senate Bill 5526 creates “Cascade Care,” a program to offer standardized plans for individual health coverage, to be offered by private insurers on the benefit exchange.

The plans won’t be available until January 2021, and it’s too early to know what exact coverage they will offer or how much they’ll drive down health-insurance costs.
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The challenges now will be (1) finding takers on the insurance side (i.e., insurers who want to contract with the Health Care Authority to offer these plans), and then (2) building a network of health care providers willing to accept the capped prices those insurers are allowed to pay. Should be interesting.
 
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