On June 1, 2019, the Nevada Senate adopted Senate Concurrent Resolution No. 10, directing the Legislative Commission to study the feasibility, viability, and design of a public healthcare insurance plan for the state’s residents. Last month, January of 2021, Manatt Health released the results of their study commissioned by the Senate Resolution, titled Evaluating Public Health Insurance Plan Options for Nevada Residents. Today, we’re going to take a look at what Nevada’s public health insurance option hopes to accomplish, potential structures analyzed in the study, and the likely impact toward achieving Nevada’s stated goals.
The goals for the study were simple:
- Improve stability in the state’s health insurance market
- Reduce the number of uninsured
- Increase the access and affordability of insurance for the state’s residents
Realistically, Nevada has a relatively stable insurance marketplace. Nevada Health Link, the state-run insurance exchange, added two new insurers in 2021 and enrollment also increased almost 6% from 2020’s open enrollment number. It now counts nearly 82,000 Nevadans enrolled in the exchange.
Access and Affordability
Access and affordability are a bit of a different story. Rates rose 4.2% in 2021, well above the national median of 1.1%. That said, Nevada isn’t all that expensive from an average premium perspective. The benchmark individual Silver-tier plan (see our health insurance exchange terminology guide for more information about metal tiers) costs about $393 in 2021, below the national average of $452. However, deductibles in 2019 were slightly higher than neighboring states, averaging about $4,341 compared to between $3,499 and $4,034 on average in states like Arizona, Utah, Oregon, and others.
Nevada’s rural areas also have issues with access to care. Data from 2016 shows that more than 80% of rural Nevadans live in an area with a primary care shortage. That shortage drives up prices, which increases premiums in some of those rural areas. Benchmark Silver premiums in urban Clark and Nye counties averaged about $369. In rural counties like Humboldt, Elko, White Pine, Lincoln, and others, the average premium was $643. Given this data, any public option should cater to reducing the costs for Nevada’s rural residents.
In 2010, Nevada’s uninsured rate for those under age 65 stood at 25%. Though Medicaid expansion achieved through the Affordable Care Act (ACA) has cut that number nearly in half, the state’s uninsured rate still stands higher than the national average of 10% and among the highest for states that have implemented Medicaid expansion under the ACA. Interestingly, employed Nevadans make up almost 63% of Nevada’s uninsured population, while almost 56% are eligible either for Medicaid/CHIP or marketplace tax credits.
Nevada’s Public Health Insurance Options
The report from Manatt Health examined two distinct health insurance public options. Those are outlined below:
Buy-in to Public Employees’ Benefits Program
Nevada’s public employees access health care through the Public Employees’ Benefits Program (PEBP). One public health insurance option would include enabling all residents to purchase a plan similar to PEBP plans. This plan would be purchased off of Nevada’s state-run health insurance exchange. As a result, enrollees would be ineligible to receive any federal tax subsidies.
PEBP and Marketplace Stability
The PEBP would likely have little to no impact on the existing Nevada Health Link marketplace unless a significant number of exchange enrollees switched to the PEBP plan. Interestingly, Manatt found the PEBP plan is comparable to an ACA Gold plan. Any significant movement from an exchange plan to the PEBP plan may actually lower the premiums in the marketplace. Gold plan enrollees tend to be heavy health insurance users.
PEBP and Access and Affordability
The state could implement this public option in two forms. The state could create a separate risk pool or roll enrollees into the existing employee risk pool. Manatt’s study found that a separate risk pool with no state subsidies would be untenable. The small pool of enrollees – including those from high-cost areas – would result in high premiums. However, rolling these enrollees into the existing employee risk pool could expand the pool enough to make it affordable.
Such a move would make the plan about 9% less expensive than a comparable marketplace plan. However, pushing residents into the existing employee risk pool could raise employee rates by 2 to 3%. Manatt estimated that the plan would enroll about 6,500 residents, most of whom reside in rural areas. The premium difference for those rural enrollees could be significant. We saw earlier the average premium for some rural counties amounted to $643. The PEBP plan would be comparable to a Gold plan in the ACA exchange, as well, so it’s a better plan from an individual cost-sharing viewpoint. Gold plans’ actuarial cost-sharing is about 80%, meaning individuals spend less out-of-pocket than Silver and Bronze plans.
As a result, the PEBP option would positively impact Nevada’s rural communities by lowering health insurance premium costs. Nevada also could offset the increased public employee costs by making contributions in the excess amount to their Health Reimbursement Accounts (HRAs) or otherwise subsidize the employee premium costs, which were estimated to be $6 to $10 million in total.
PEBP and the Uninsured
Buy-in to the PEBP is likely to be among rural uninsured with more limited – and costly – insurance options. Enrollees are also likely to be ineligible for subsidies on the individual market because the PEBP will be unsubsidized. Manatt estimated that the PEBP plan would decrease the number of uninsured by between 800 and 2,700 depending on the design.
A Qualified Health Plan (QHP) through Nevada’s state exchange
The second option explored is a qualified health plan (QHP) sold through the state exchange and/or off-exchange in partnership with an insurer. The state would likely create Silver-level and Gold-level plans that would compete with existing exchange insurance products.
QHP and Marketplace Stability
Because the QHP will compete with existing marketplace plans, it’s likely to have a net positive effect on marketplace stability because it will increase the marketplace pool. Because those who generally go uninsured are relatively healthy, adding them to the pool may lower premiums.
However, subsidies on the marketplace are determined by the second-lowest-cost Silver plan. Therefore, the state-sponsored QHP could lower the subsidies available to Nevada residents, causing some to leave the market because the out-of-pocket premium cost of plans may increase.
Overall, though, a public QHP would likely have a positive impact on the marketplace, if any.
QHP and Access and Affordability
The study assumed that the cost of the public option premiums would be 10% or 20% less than existing Silver and Gold plans. Given those assumptions, the QHP plans would meet the state’s affordability goals. It’s worth noting, however, that the study didn’t specify exactly how the state would achieve those goals. It could take a route similar to Washington’s new Cascade Care public option and mandate reimbursement maximums a specific percentage above current Medicaid reimbursements. Or, they could achieve significant savings because there isn’t a profit margin baked into the plans.
With an average premium of between $318 and $442, these plans would save rural enrollees significantly, improving their access to affordable health insurance.
QHP and the Uninsured
Manatt’s study estimates that between 9,309 and 31,923 individuals would enroll in the state QHP in 2022. Of those, the uninsured would account for up to 4,800 new enrollees. That means that the majority of individuals enrolling in this QHP plan would be existing insurance marketplace enrollees.
What does it all mean? Realistically, if the state can achieve the 10% to 20% premium reductions assumed in the QHP model, it’s the better public health insurance option. Enrollee premiums will be lower and if the state can create a competitive Silver-level plan, they’ll likely increase enrollment overall, in rural areas, and among the uninsured.
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