We’ve written a few times about health care public options (CBO’s Public Option Design Review and the Medicare-X Choice Act). In the summer of 2021, Oregon joined other states in moving the concept of a health care public option forward. The state passed HB 2010 which directed the Oregon Health Authority (OHA) to create an implementation plan for a public health plan. In January, Manatt released a health care public option implementation report. Below are several key takeaways from the report.
A Coordinated Care Model Best Meets Oregon’s Needs
Manatt considered three types of plans:
- A coordinated care model — In this model, the state would use its existing coordinated care model consisting of a network of all types of health care providers who agree to work together. The state has 16 Coordinator Care Organizations (CCO) who provide service to the state’s Medicaid program, Oregon Public Health, as well as the state’s employees.
- A carrier-led model — In this model, the state would contract with health insurance carriers to deliver specific plan designs to Oregon’s population.
- A state-led model that partners with a third-party administrator — In this model, the state would hold the plan risk and partner with a third party to administer the plan.
Manatt ultimately recommended the health care public option use a coordinated care model that may leverage the state’s CCOs as well as a similar model using licensed insurers.
Implement Specific Steps to Improve Health Equity
A key goal of the state’s plan to create a public option is to advance health equity. Specifically, the state would like to ensure “all people can reach their full health potential and well-being and are not disadvantaged by their race, ethnicity, language, disability, gender, gender identity, sexual orientation, social class, intersections among these communities or identities, or other socially determined circumstances.”
How does that apply to the state’s proposed CCO-centered public health option? Manatt found the model best enabled the state to create specific requirements — similar to the state’s Medicaid CCO model — that ensures CCOs and insurers meet equity goals.
Manatt also pointed out that Oregon needs to invest in targeted marketing and outreach to specific populations to improve health equity. For example, the state could build the public health option to ensure that the plan reaches out to those recently disenrolled from Medicaid. That type of targeted communication will help the state meet its equity goals.
Take Specific Steps to Achieve Affordable Coverage
A primary goal of the public health plan is to drive down costs. Specifically, the state would like to:
Make Premiums More Affordable.
To that end, Manatt recommended that the state first perform a rate reset. Then, the state could make the public option meet the state’s cost growth target of 3.4%. The rate reset would help adjust for high past cost growth. Going forward, the state could force the public option to adhere to a 3.4% growth threshold. That represents a significant decrease considering the state has experienced 6.5% growth on average in the past.
The state initially set a goal of developing a public option with low cost-sharing. Specifically, the state envisions a plan with between a 94% and 98% actuarial value. Consider that Affordable Care Act plans typically range between about 60% (Bronze plans) to 90% (Platinum plans), and that’s a lofty standard. Manatt agreed, stating it would be difficult for a public option to have low premiums and achieve the cost-sharing desired, without the state contributing additional funds.
Provide Comprehensive Benefit.
The ACA mandates that qualified health plans include what are called essential health benefits (EHB). Those benefits include things like pediatric services, hospitalization, and laboratory services, among others. Plans sold on the ACA exchanges must include those specified benefits. Oregon would like its public health option to require pediatric and adult dentistry. Though ACA plans are required to deliver certain pediatric dental services, adult services are not required. This, as Manatt points out, could be problematic because the addition of adult dental services would likely increase premium costs.
Create a Section 1332 Waiver.
Several states have implemented Section 1332 reinsurance waivers to drive down costs. Essentially, reinsurance programs drive down premiums because states create a fund that reimburses insurers for certain high-cost members. For example, in Minnesota, the state’s reinsurance program reimburses insurers 80% of claims above $50,000 up to a cap of $250,000. As a result, insurers know that the state will reimburse them for certain expensive members. They can spread those savings on to other members through reduced premiums.
The federal government subsidizes many individuals who buy insurance through the ACA exchange. As a result, they’re willing to share any cost savings due to those lowered subsidies with the state. Those cost savings are referred to as pass-through funding.
Manatt envisions the state leveraging some of those pass-through funds as well as a potential new revenue stream. Colorado recently submitted a waiver amendment related to their statutory premium reductions. Oregon could do the same if they commit to a 3.4% maximum premium growth. They could then potentially claim pass-through funding for the difference between what premiums would have been and that 3.4% growth.
Though Oregon’s interest in a public option is real and has well-defined goals, the economics of the situation may make it difficult to achieve all those goals.
Certifi’s health insurance premium billing and payment solutions help healthcare payers improve member satisfaction while reducing administrative costs.