Nevada lawmakers are poised to once again debate creating a state public health insurance option.
Legislation expected to be introduced Wednesday would require insurers that bid to provide coverage to the state’s Medicaid population to also apply to offer a public option plan.
The plans would resemble existing qualified health plans certified by the state health insurance exchange in many ways — for instance, covering a suite of essential health benefits — and would be available for purchase both on and off the exchange. The legislation would, however, require those plans to be offered, essentially, at a 5 percent markdown with the overall target of reducing average premium costs in the state by 15 percent over five years.
The bill also aims to align provider networks between Medicaid and public option plans in order to make access to care more seamless for people who, because of their income level, fluctuate between being covered by Medicaid and securing subsidized insurance on the state exchange.
The proposal, which is being spearheaded by Senate Majority Leader Nicole Cannizzaro, represents both an outgrowth of and a departure from other public option ideas lawmakers have considered in previous legislative sessions, including a 2017 bill that would have allowed Nevadans to buy into the state’s Medicaid program, which the Legislature approved but was vetoed by Gov. Brian Sandoval, and a 2019 study lawmakers approved to look into the possibility of allowing Nevadans to buy into the state’s Public Employee Benefits Program (PEBP) health plan.
The Medicaid buy-in proposal fell by the wayside during the 2019 session after its sponsor, Assemblyman Mike Sprinkle, resigned following accusations of sexual harassment. But Cannizzaro revived the public option conversation as a PEBP buy-in proposal in the final days of that session in the form of a resolution to study the concept.
“One of the top things that you will hear if you go and talk to people at the doors is the cost of health care here in the state,” Cannizzaro said. “When this idea of a public option came about, I immediately jumped on it because I think it is absolutely what folks are looking for and I think it’s a real solution to tackle this, ‘How do you make health care more accessible and more affordable?’”
Unlike the Medicaid and PEBP buy-in proposals, the public option that the new measure aims to establish would be overseen by the state but coverage would be directly provided by private health insurance companies, saving the state the overhead costs of administering a public health insurance program.
While the bill’s introduction will come a little less than five weeks before the end of the session, Cannizzaro said it took time after the release of the PEBP buy-in study in January to consult with state health officials on the legislation and work with the Legislative Counsel Bureau to draft it. The national nonprofit group United States of Care has also been involved with crafting the bill.
The legislation aims to leverage the state’s purchasing power with Medicaid managed care contracts with insurers — which were worth about $1.8 billion a year in fiscal year 2020, according to a memo from the bill’s proponents — to compel insurance companies to provide affordable public option plans as well. Under the legislation, all companies that bid to be a Medicaid managed care organization would also be required to submit a bid to be a public option plan.
Though all three of the state’s Medicaid managed care organizations offer plans on the exchange, the legislation would mandate that insurers that offer a public option plan do so in every county and both on and off the exchange — with the goal of providing additional coverage options to the state’s rural residents and preventing any future threat of bare counties, such as the one the state faced in 2017. Two of the Medicaid managed care organizations offer exchange plans in all 17 counties, while one offers plans in only three counties.
Insurers that don’t apply to be a Medicaid managed care organization would be able to bid to become a public option plan as well, and the legislation leaves to the state’s discretion how many public option plans it approves. Under the bill, development and implementation of the public option would ultimately fall to the director of the Department of Health and Human Services, in consultation with the head of the Silver State Health Insurance Exchange and the commissioner of the Division of Insurance, with the first coverage year slated for 2025.
Because the public option plans would be offered on the state’s health insurance exchange, people who are eligible for federal subsidies under the Affordable Care Act would be able to use those dollars to purchase a fully or partially subsidized public option plan. In addition to being offered both on and off exchange in the individual market, the plans would also be open to the state’s small group health insurance market.
All providers that contract with Medicaid, PEBP and workers’ compensation would be required to participate in at least one public option plan. The legislation would set the floor for contracted rates between providers and insurance companies for public option plans at Medicare rates, a move the bill’s proponents have framed as protecting providers from being negotiated down to Medicaid rates. Medicare generally pays more than Medicaid but is not as generous as private insurance.
“We want to make sure that providers can continue to negotiate,” Cannizzaro said. “We want to be able to reward providers and insurers when they can provide good value-based care that is actually improving the health care of Nevadans long term.”
It isn’t yet clear what kind of impact the legislation might have on reducing the number of uninsured people in Nevada, which, with about 350,000 uninsured residents, has one of the highest uninsured rates in the nation. A handful of states have explored establishing a public option — and only one, Washington, has been successful in implementing one — but none of them have an uninsured rate as high as Nevada’s.
An interim study into the feasibility of implementing a state-sponsored public option plan, commissioned by the Legislature and conducted by the health policy firm Manatt Health, estimated that a 10 percent reduction in premiums would translate to between zero and 1,500 uninsured individuals gaining coverage in the first year of the plan’s existence. A 20 percent reduction in premiums would reduce the state’s uninsured population between 300 and 4,800 people in the first year.
“These enrollment figures highlight that a 10 percent or 20 percent reduction in premiums may not be enough to substantially encourage the currently uninsured to enroll in coverage for the first time,” the study said.
By comparison, this bill requires at least a 5 percent reduction in premiums from a “reference premium” — defined as the second lowest cost silver plan offered on the exchange in any given ZIP code either in 2024, adjusted for inflation, or the previous year, whichever is lower — though the goal is to eventually achieve an overall 15 percent reduction in average premium costs over five years. To that end, the legislation gives the state the ability to approve premiums that exceed that 5 percent premium reduction threshold provided that the state is still on target to hit that five-year goal.
The legislation would also require the state to apply for a waiver to allow it to capture any federal dollars saved as a result of the public option program and then apply those dollars toward reducing premiums and out-of-pocket costs. Such waivers have been used under both the Obama and Trump administrations to help states implement reinsurance programs, a different kind of cost-reducing measure.
The bill also notes the state may apply for a waiver that would allow it to combine risk pools between Medicaid and the public option, if doing so would reduce the overall costs of Medicaid to the state and federal governments.
The legislation authorizes the state to contract with an actuary to assess the impact of a public option plan on the state’s health insurance markets in preparation for applying for any federal waivers. That, coupled with the long lead time until the public option goes into effect in 2025, Cannizzaro said, will give the state and lawmakers time to iron out any issues that may arise.
“We’re giving some additional time in the interim to continue with data analysis and an actuarial [study] to determine what the right points of this bill will be,” Cannizzaro said. “If this needs some tweaks along the way, we have the time and the ability to do that with giving flexibility to [the Department of Health and Human Services] and then also allowing for time, if the Legislature needs to make some adjustments before its actual implementation, we have some time to do that.”
Bill proponents hope the reductions in premiums and out-of-pocket costs will be attractive to the roughly 17 percent of uninsured Nevadans for whom insurance through the exchange is unaffordable and, potentially, some of the 27 percent of uninsured Nevadans who are undocumented and therefore aren’t eligible for exchange subsidies or Medicaid.
“If there are affordable health care plans, people are going to be incentivized and want to try to get health care coverage. So much of what plays into your decision to pay for health care coverage or not comes down to cost,” Cannizzaro said. “We have such a high and persistently high uninsured population that, again, doing nothing is not solving that problem.”
Cost, however, is only part of the battle in reducing Nevada’s uninsured rate. More than half of uninsured individuals in the state are already eligible for Medicaid or subsidized coverage through the exchange — programs that make health care affordable or even free to families — but still aren’t insured.
While affordability already shouldn’t be an issue for those uninsured individuals, the bill’s proponents hope that public awareness about a state public option plan might encourage Nevadans to seek out coverage, where they will find that low or no cost plans are already available to them.
The bill also proposes making changes to the state’s Medicaid program by increasing eligibility for coverage for pregnant women in Nevada up to 200 percent of the federal poverty level, expanding the definition of providers who can determine presumptive eligibility for pregnant women, covering lawfully present immigrants who are pregnant, adding coverage for doulas and community health workers and requiring payment parity between advanced nurse practitioners and physicians.
“I bring a new perspective to this and realize how important it is to have access to this kind of care, especially for moms who can’t otherwise afford it,” said Cannizzaro, who is expecting her first child this summer. “If there’s a way that we can start to increase that here in the state, that is going to have long-term benefits for the health of Nevada families overall.”
Cannizzaro acknowledged there will be a cost to those Medicaid enhancements and said she is curious to see what fiscal notes state health officials put on the bill so lawmakers can start to figure out how to pay for them or whether they need to build more flexibility into the bill. There may be a cost, too, on the public option side of the bill, though it is not yet clear what that might be.
While health industry lobbyists have been receiving presentations on the bill over the last few days, Cannizzaro acknowledged there will likely be concerns with the legislation that will need to be discussed in the coming days and weeks.
“I’m hopeful that we’re going to come up with something that makes sense and that folks can get on board and in support of,” Cannizzaro said. “Do I think everyone is going to love this proposal from the get-go? No, but our job, and the reason why we’ve been having stakeholder meetings, is to talk to everyone who is at the table in this state so that we can hear their questions and concerns.”
Cannizzaro said that bill proponents have also been talking with the governor’s office about the bill.
“Obviously there is still work that needs to be done on this bill, but I know that the governor supports making sure that health care is accessible and affordable for Nevadans, and so we’re working with his office to make sure that we are getting this right as well,” Cannizzaro said. “He knows just as much as the rest of us that this pandemic has truly, I think, reiterated the need for something like this in Nevada.”