Nevada Explores Potential State Public Option Models, Impacts

Nevada’s state senate might consider a public option based on an existing public program or a model that creates a new Silver or Gold public option plan on the Affordable Care Act marketplace, according to a Manatt Health report.

Although Manatt Health’s analysis was specific to the state of Nevada, the results could provide some insights for payers and the public alike as the Biden administration has promised to steer the country towards a national public option.

The report outlined two potential public option models and analyzed the potential outcomes of each for Nevadans.

The first model would allow individuals to pay into a plan similar to Nevada’s Public Employees’ Benefits Program (PEBP). The plan would be an off-exchange health plan that PEBP would administer.

PEBP currently covers over 70,000 state employees and retirees in Nevada and has two risk pools. One pool is for current state employees and retirees, while the others for employees and retirees who may have worked for local and city governments. This plan’s benefits are equivalent to those of an Affordable Care Act marketplace Gold plan.

Although this first model would be building off of a program that already exists, the state would still have to account for startup and implementation costs, the researchers warned.

The model would reduce costs due to higher administrative efficiency and nonexistent profit margins. The statewide risk pool could equalize premiums.

However, the researchers found that this model would require significant state subsidization. Since it operates as a risk pool, the plan would need to attract a strong population of enrollees. Furthermore, because it is off-exchange, enrollees would not qualify for Affordable Care Act exchange tax credits.

Alternatively, the state could allow individuals to buy-into the PEBP as it currently exists. This option would attract around 6,500 enrollees.

The analysis found that the premium for this altered version of the first model would be about nine percent cheaper than Nevada’s comparable marketplace coverage.

Premiums could average around $440 to $444 each month, with rural residents particularly benefiting from a lower alternative to the Affordable Care Act marketplace.

However, this model would also increase PEBP premiums by two to three percent due to the shift in enrollees’ risk profiles. There are a couple of options to offset this increase, including implementing state subsidies totaling anywhere from $6.5 million to $9.6 million.

The second model would offer Silver and Gold tier qualified health plans through Nevada’s Affordable Care Act marketplace and the individual health insurance marketplace.

A contracted payer could oversee the health plans or the state itself could do so.

“In either scenario, the Silver State Health Insurance Exchange (the state agency that operates Nevada Health Link) or the Division of Health Care Financing and Policy could oversee the product,” the researchers explained.

“If a state agency administers the plan, it can do so in partnership with a third-party administrator (TPA) to administer the provider network and process claims. Similar to a PEBP buy-in plan, this model would benefit from existing state infrastructure, but may incur additional startup and implementation costs that would need to be borne by the state.”

Enrollees on these health plans could be eligible for federal tax credits since the plans are on the exchange.

The key would be determining how to reduce administrative costs enough to make such an option worthwhile and distinct from other offerings on the Affordable Care Act marketplace. The report suggested capping provider reimbursement or setting premium reduction targets.

The researchers analyzed the impact based on whether the state’s goal was a 10 percent premium reduction or a 20 percent premium reduction. Under these assumptions, the Silver plan public option enrollees could spend $297 to $358 each month on premiums and the Gold plan could cost from $385 to $433 per month on average. Off-exchange plans would be cheaper.

This model would draw higher enrollment compared to the other model, although the range is broad since it is based on premium reduction.

The state could also use a Section 1332 waiver to make a public option more affordable, the researchers noted.

Nevada is not the only state to consider creating a public option.

In Connecticut, lawmakers proposed a bill that would form a public option for small businesses but the issue proved very divisive. Opponents—most notably Cigna—were concerned that the bill would lead towards a single-payer system that would eliminate the private insurance competition. Ultimately, the bill did not move forward.

Payers in Colorado also had concerns when the state instituted a public option. State officials claimed that the move would cut premiums by nine to 18 percent.

However, the coronavirus pandemic cut short the state’s new health plan. Colorado put its public option on hold and unemployment soared.