Tuesday, February 23, 2016

Hillary Clinton "waives through" the public option

[Update: more on "BHP for all," with New York as model, on healthinsurance.org, here.]

Hillary Clinton has updated her package of proposals for "building on" the Affordable Care Act, finding incremental ways to make coverage more affordable. The new proposals include this:
Continue to support a “public option”—and work to build on the Affordable Care Act to make it possible. As she did in her 2008 campaign health plan, and consistently since then, Hillary supports a “public option” to reduce costs and broaden the choices of insurance coverage for every American. To make immediate progress toward that goal, Hillary will work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice.
Clinton is here suggesting that her HHS will support state initiatives to form their own public options. In a vague way, she references the ACA's Section 1332 "innovation waivers" enabling states to propose alternative schemes to the core ACA structure that would meet the ACA's coverage and affordability standards. The great advantage of this proposal -- as with Clinton's promise to ramp up healthcare antitrust enforcement -- is that it would not require legislation.

As Kaiser's Larry Levitt has pointed out to me, "Nothing in the ACA stands in the way of a state creating a public option." He further noted that a state would not need an innovation waiver to form one. It would, however, need funding, and that's where the waiver might come in. If the state could find other means of savings, those measures might be integrated in a waiver proposal with a public option.

A public option might put downward pressure on premiums, and so help both plan buyers who earn too much to qualify for subsidies and the federal treasury -- and so the long-term viability of the ACA marketplace. But it would not do much to ease the affordability crunch for subsidy-eligible buyers at the upper end of the subsidizable income range -- say, over 200% FPL.  The main problem for those buyers is the ACA subsidy scale, which has them paying between 6 and 10 percent for a benchmark silver plan, with high cost-sharing.

As I've noted before, however, the Basic Health Plans (BHPs) that the ACA enables states to form to serve residents with incomes under 200% FPL could provide the basis for an alternative scheme that might be called the all-public option.  BHPs, so far created only by New York and Minnesota,  are essentially managed Medicaid plans that give enrollees a choice from among MCOs. Premiums and copays are minimal.

Via innovation waiver, a state could propose extending a BHP -- or forming a BHP-like program from scratch -- to make it available to everyone in ACA subsidy-range. It could even be offered, on a full-cost buy-in basis, to everyone who needed it, regardless of income. In New York, there is some precedent for considering such an option. I have an article about it in the works.up here, on healthinsurance.org.

Update, 2/24: as a follow-on the healthinsurance.org post, here's a look at some of the funding issues that would come into play should New York decide to expand access to its BHP.


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