A federally run health plan is politically untenable, but a handful of states are pursuing their own public plans with the idea of keeping Obamacare costs lower for consumers.
Minnesota, Maine and Rhode Island lawmakers have debated setting up a state-funded health plan, which would be available to shoppers in Obamacare’s online marketplaces alongside private plans. And Colorado residents soon will vote on whether to create a taxpayer-funded health program dubbed “ColoradoCare,” which would cost $38 billion a year but guarantee coverage for everyone.
The Affordable Care Act doesn’t provide a government-run health plan, an idea Congress rejected when it passed the law in 2010, but it does provide a way for states to offer their own.
The idea is contentious, even at state and local levels. By offering cheaper rates, public-option plans can put pressure on private plans to reduce prices as well, helping consumers buy health coverage that is typically expensive.
But opponents say government-run health plans ultimately hurt the healthcare industry by destroying competition among plans and slashing reimbursements to doctors and hospitals.
Yet there may soon be some room for lawmakers to work together, as states grow increasingly concerned about rising rates and decreasing competition in the Obamacare marketplaces where their low-income residents are buying coverage.
About 100,000 Minnesota residents are losing their Blue Cross plans next year, as the insurer withdraws some individual market plan offerings. Some rural counties in the state might be left with options from just two carriers.
The state already sells a state-run, basic health plan, called MinnesotaCare, but it’s only available to low-income residents and isn’t sold in the state’s marketplace, MNsure. Democrats have been pushing to expand the plan to everyone regardless of income level and offer it through MNsure.
In the spring, a state Senate committee passed legislation from Democratic Rep. Kathy Sheran expanding MinnesotaCare to those with incomes above 200 percent of the federal poverty level and allowing them to put their Obamacare subsidies toward the plan. Her bill is supported by the Minnesota Nursing Association but opposed by the Minnesota Hospital Association.
“What [the Affordable Care Act] did, I believe, is it exposed something,” Sheran told the Mankato Free Press at the time. “People started to see the differences in the geographic regions about how much a health insurance product costs.
“And we saw, much more clearly for the first time, how rural Minnesota is paying more for the same insurance product outcomes as other parts of the state,” she added.
Another bill from Minnesota Sen. John Marty would allow the state to use federal Obamacare subsidies to administer a single-payer healthcare system in the state.
The Maine legislature passed a bill directing a study on a public option and single-payer system, but it failed to override a veto by Republican Gov. Paul LePage. Two Democratic senators in Rhode Island would set up a state health insurance program.
But to sell their plan via the online marketplaces set up under Obamacare, states must jump through a number of hoops.
They would have to obtain what is called a 1332 waiver, a part of the healthcare law that gives states more flexibility in how they implement it. And to do that, they must obtain permission from their legislature, submit an application that includes economic analysis and explain how it is consistent with the overall aims of the Affordable Care Act.
To get a waiver for selling a public option, states also must convince the Obama administration that their government plan wouldn’t harm competition, an argument that could be challenging to make.
Democracy Labs is a weekly feature covering state-level policy experiments that could filter up to Washington. Send suggestions to [email protected]
