BACK FROM THE DEAD
States revive interest in the Affordable Care Act to expand coverage
The term “public option” came into wide usage during the 2009-20I0 debate on the Affordable Care Act.
Public Policy Analysis & Opinion
By Kevin P. Hennosy
In states that conduct legislative sessions next year, this fall is a time of bill drafting and pre-filing. Based on state legislative actions, and the Supreme Court’s rejection of calls to find the Affordable Care Act of 2010 (ACA) unconstitutional, many state lawmakers will cast their collective eyes upon healthcare issues in 2022.
These actions may include creation of public style-option plans, easy enrollment to ACA plans, and auto-enrollment to such plans. The competition arising from each of these reforms should increase the value of producers in the field to insurance carriers, if those carriers want to compete for business.
The Commonwealth Fund (CF), a nonpartisan policy development organization that focuses on the expansion of health insurance coverage, published an interesting blog post on July 23, 2021, which examines the experiences of three state-based efforts to construct “public option-style” healthcare plans consistent with existing ACA marketplaces.
The term “public option” came into wide usage during the 2009-2010 debate on the ACA. Proponents of providing a public option to health insurance markets argued that such plans would provide competitive motivation for all market participants to raise quality and reduce prices. Congress failed to include a public option in the ACA.
According to the CF report, “Traditionally, ‘public option’ has referred to publicly funded plans that may or may not rely on private entities to provide some administrative functions.”
The CF blog post explains that the phrase now applies “to privately funded plans established pursuant to a state law and subject to certain heightened requirements meant to improve value and advance state goals, like cost containment.”
Overall, the post observes that legislatures create public option-style plans to “offer consumers a high-value, affordable alternative to fully private plans.”
The CF blog post looks at recent legislative enactments in three states: Washington, Nevada, and Colorado. “All three states have already leveraged the [ACA]: They operate their own marketplaces, took actions to promote access to adequate insurance, and expanded Medicaid,” observed the CF bloggers.
Multiple policy aims drove the legislative actions: 1) Public-private partnerships, 2) Working within existing markets, 3) Striving for affordability, 4) Driving broader system improvements, and 5) Leveraging federal funding for state efforts to expand healthcare coverage.
In the realm of public-private partnerships, the post explained that Washington and Colorado “tasked private carriers with offering new plans that meet heightened requirements-for cost containment, network adequacy, and care quality-relative to other plans on the market.”
Officials in the three states addressed by the CF bloggers expect that the new public option-style plans will influence the existing healthcare insurance markets, including private plans.
The CF researchers observed, “[I]n all three states, the public option plans should expand coverage options for consumers in the marketplace and could potentially drive down premiums of marketplace plans. In Colorado and Nevada, state rules will make the public option-style plans available to consumers outside the ACA marketplace.” This extension will include small employers in Colorado and “potentially Nevada.”
The CF blog post contains a vague discussion of the three states’ efforts to strive for increased affordability. The post acknowledges, “The states are seeking to provide more affordable coverage and contain costs but had to make concessions to bring providers to the table, both politically (for providers to support-or at least not actively oppose-the changes) and practically, in terms of participating in public plan networks that may pay lower rates.”
The system improvements alluded to by the CF researchers refers to issues of reducing “disparities and inequities in health and healthcare.”
At least Washington and Colorado will endeavor to use their public option-style plans to secure increased federal funding available to enable consumer participation in their marketplaces. These initiatives focus on Section 1332 of the ACA (The State Relief and Empowerment Waiver). Numerous sources estimate that nationally the waiver will expand coverage to 1.2 million uninsured Americans in 2022.
According to the blog post, “Public option programs that lower marketplace premiums-and, thus, federal spending on premium tax credits-may entitle states to federal dollars (called “pass-through funds”) that may be used to further boost affordability (e.g., by supplementing new state subsidy programs in Washington and Colorado) or to advance equity.”
Access and affordability
The CF researchers note that Washington State faced opposition from insurance carriers and providers when it initially “capped plans’ statewide aggregate provider reimbursement rate at 160% of Medicare” to reduce premiums. Opposition from providers impeded the carriers’ efforts to create networks, which triggered pushback from the carriers against the cap. The confrontation resulted in several Washington counties being excluded from the public option-style plans in 2021.
The Washington legislature responded. The CF researchers explain, “Washington passed legislation that would ensure statewide availability of public option plans, including requiring certain hospitals to contract with a public option plan in 2023 if a public option plan is not available in each county in 2022.”
Colorado and Nevada went to school on the Washington experience. First, both states addressed the problem of securing providers. According to the CF bloggers:
To bring in providers, Nevada will require any provider participating in its Medicaid program or other state plans to enroll in at least one public option plan network. Colorado will require providers to participate only if a public hearing shows that carriers cannot meet premium reduction or network adequacy requirements. If this happens, the state can set reimbursement rates on providers and fine or suspend hospitals that refuse to accept the set rates.
To provide a “spoonful of sugar” to the carriers, the state-sponsored plan in Nevada offered flexibility to carrierswhen it comes to selling the lower reimbursement rates. “Recognizing carriers may not welcome this responsibility, Nevada will require all Medicaid-man-aged care organizations to submit ‘good faith’ bids to administer the public option plan,” according to the CF.
In the Colorado example, where the providers have a hearing option, the state will require all carriers to offer the public option plan in every county where the carrier operates.
The CF researchers note that all three states that offer the public option-style plans, included “reimbursement floors tied to Medicare rates for some or all providers to mitigate hospital and physician stakeholders’ concerns.”
Another CF blog post focuses on state efforts to remove impediments to consumer enrollment in the ACA marketplace.
In 2019, Maryland adopted a system of integrating tax filings with ACA enrollment. As described by the CF bloggers, “On their tax forms, Marylanders can choose to share their insurance status, income, and other relevant information to receive an eligibility determination for Medicaid and subsidized marketplace plans.”
In instances where the taxpayer shared such information with the state, the CF notes, “The marketplace notifies these taxpayers of their eligibility for coverage and, if applicable, offers them the opportunity to enroll in a marketplace plan outside of the open-enrollment period.”
The blog post author analyzed Maryland data and concluded, “More than 60,000 people shared their information with the marketplace-most (more than 53,000) were deemed eligible for marketplace coverage or Medicaid.”
Other states borrowed from Maryland’s experience. Colorado will adopt a similar system for tax year 2021 through the 2022 filing process. Virginia will phase in a system focusing first on Medicaid eligibility in filing year 2023 and then the marketplace in filing year 2025.
As of August 2021, the CF noted that “Legislation to create an Easy Enrollment program is still pending in Maine and New Jersey, and New Mexico considered a proposal during its 2021 legislative session.” In addition, “Massachusetts enacted legislation this year requiring the marketplace to conduct targeted outreach based on information from tax filers who consent to sharing their income information.”
The Pennsylvania legislature defeated an Easy Enrollment bill in 2021, but the state-managed marketplace is exploring whether it could be enacted through administrative powers.
The CF blog notes that auto-enrollment, in various forms, is under consideration in some states. A CF blog post on August 3, 2021, opines: “Auto-enrollment has been touted as an innovative way to expand coverage; it is likely to improve the health of the individual health insurance market risk pool, reduce premiums, and prevent gaps in coverage. For these reasons, it has appeared in various policy proposals, including public-option plans.
“California will launch a program next year that automatically enrolls those who lose their eligibility for the state’s Medicaid program into marketplace plans,” according to the CF blog post. In addition, California has pending legislation that would “facilitate outreach by allowing the marketplace to receive information on residents filing for unemployment, disability, paid family leave, and other programs and to help them enroll in coverage.”
Auto-enrollment reforms remain under consideration by other states.
The CF blogger notes, “California will launch a program next year that automatically enrolls those who lose their eligibility for the state’s Medicaid program into marketplace plans.”
Again, according to the CF blog, “Both Maryland’s new law and New Jersey’s pending legislation include provisions to automatically enroll Medicaid-eligible taxpayers in Medicaid-managed care organizations, giving them the opportunity to select a different plan or opt out.”
Furthermore, the Colorado marketplace has “floated its forthcoming ‘Easy Enrollment’ program as a way to implement auto-enrollment, and Colorado’s enacted legislation and Maine’s pending bill both include directives to study its feasibility,” explains the CF blogger.
Taken together, these reforms seem to inject new competition for private plans in insurance markets. Community contacts, explanatory skills, and long-term cultivation of trust will become even more important to securing new business. Carriers should recognize the value of their producers in the field.
Kevin P. Hennosy is an insurance writer who specializes in the history and politics of insurance regulation. He began his insurance career in the regulatory compliance office of Nationwide and then served as public affairs manager for the National Association of Insurance Commissioners (NAIC).