Public option, increased premium credits could save $12B

By | June 20, 2019

Dive Brief:

  • Introducing a public option in the nongroup market and broadening eligibility for Affordable Care Act marketplace premium tax credits could save the federal government $ 12 billion in 2020 and cover an additional 1.2 million people, according to a recent report from the Urban Institute.
  • The public option (or, alternatively, capping provider payment rates for nongroup insurers) would decrease Medicaid acute care spending by $ 19.4 billion next year, down about 5% from current levels. It would also increase coverage to an additional 325,000 people and lower spending on premiums and out-of-pocket costs.
  • Extending premium tax credits to people with incomes up to 400% above the federal poverty level would increase federal spending by $ 8.2 billion, or 2%, and provide coverage to 912,000 additional people, according to the analysis.

Dive Insight:

Attempts to broaden healthcare coverage and lower costs for policy-holders have met with resistance from policymakers who want to avoid cost increases and industry stakeholders wary of change, the report said. The authors argued the two-pronged plan of a public option and premium assistance increase would alleviate those concerns.

“This targeted approach takes into consideration the countervailing pressures that have historically blocked progress in addressing market dysfunction, improving affordability for a segment of the population currently ineligible for marketplace financial assistance, limiting provider effects to the nongroup insurance market, and reducing government spending,” they said.

The public option idea has gained some traction recently. Last month, Washington state passed a bill creating the country’s first public option, and a handful of other states have debated similar legislation. In Connecticut, a public option bill died, reportedly after opposition from Cigna, which is headquartered in the state.

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A few Democratic presidential contenders have floated the idea of a Medicare public option, including former Rep. Beto O’Rourke of Texas and former Vice President Joe Biden.

The suggested reforms to the Affordable Care Act come as the law itself still faces major legal threats. Arguments are set for next month in a Texas case challenging the ACA — after a federal judge there ruled late last year the law is unconstitutional without the individual mandate penalty, which Republicans in Congress zeroed out in a tax overhaul.

And the White House continues attempts to dial back the law. Over the weekend, President Donald Trump said his office would be announcing a plan to repeal and replace the ACA in the new two months. He gave no details, however, and has previously said new proposals were coming, although they haven’t yet materialized.

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