5 Notes About a New 'Government Health Plan' Law, for Agents

Washington state Gov. Jay Inslee rocked the U.S. health finance policy world Monday by signing Senate Bill 5526 — a bill that could create a new, government-run, “public option” health plan program.

Reports about the birth of the new “Cascade Care” public option program made headlines throughout the country.

(Related: New York, Minnesota Sue Feds Over ACA Subsidy Cuts)

But states have often started, then stopped, efforts to create ambitious new health finance programs, after fierce stakeholder opposition erupted, or the architects themselves concluded that the programs would cost too much, or be too hard to pay for.

A Democratic governor in Vermont, for example, gave up on an effort to start a state-run single-payer health care program there in 2014.

And a close look at the text of the new Cascade Care law suggests that the Cascade Care plans could be more like a standardized, state-blessed version of the plans units of Centene Corp. and Molina Healthcare Inc. already offer through many Affordable Care Act exchange plan programs than like a Medicare for All-style single-payer health care program.

Here’s a look at five other things agents and brokers might want to know about the Cascade Care text.

1. The new law would create a new set of standardized individual major medical plans that would be sold by all Washington state exchange plan issuers.

Managers of Washington’s state-run ACA exchange program, the Washington Healthplanfinder program, would have to come up with at least one “standardized health plan” design, and as many as three standardized health plan designs, that would be available with bronze, silver and gold benefits levels.

Starting Jan. 1, 2021, each health insurer that sold any coverage through the Washington Healthplanfinder exchange would have to offer at least one silver standardized health plan through the exchange, and at least one gold standardized health plan.

An insurer could still sell nonstandardized health plans through the exchange.

Insurers already sell standardized health insurance policies through the Medicare supplement insurance program, and the Washington state standardized plan provision is similar to a program federal ACA exchange system regulators were developing while former President Barack Obama was in office.

2. The Washington State Health Care Authority would have to work with one or more carriers to provide at least one bronze, silver and gold exchange plan in each county in the state, starting with the 2021 plan year.

The goal of this provision would be to make sure that every county in the state offers residents a choice of ACA exchange plans, according to the bill text.

The state health care authority would buy the coverage from private carriers. The text says nothing about whether the carriers would work with agents or brokers, let alone pay sales commissions, but private companies would provide the coverage.

3. The new state-procured exchange plans could be tough on health care providers.

The new program might come to life facing resistance from many health care providers.

The new plans would have to be standardized health plans. The carriers offering the plans could use care coordination or care management to control the enrollees’ use of care.

The maximum rate of provider pay in most of the state would be 160% of what Medicare pays.

Analysts at the Congressional Budget Office have estimated that commercial plans typically pay in-network providers reimbursement rates equal to about 200% to 250% of the traditional Medicare rates.

4. The new Cascade Care plans might not actually be that tough on health care providers.

The drafters of the new law have expressed their mixed feelings about the 160% provider reimbursement rate ceiling by including provisions that plans would, or could, use to prop up rates, or even to waive the 160% ceiling.

The law would require, for example, that the new plans pay primary care providers at least 130% of the Medicare reimbursement rates.

The law would set different, more generous reimbursement rate standards for critical access hospitals and community hospitals in rural areas.

If a Cascade Care carrier showed that it could not attract enough providers, with the 160% cap in place, to form an acceptable provider network, it could pay providers more than 160% of Medicare reimbursement rate, if it used other methods to achieve “actuarially sound premiums that are 10% lower” the premiums the carrier charged the year before.

5. The new law also includes a provision that could help more consumers pay for plans that could, in theory, pay agent commissions.

The law calls for the state’s exchange to work with the state health care authority and the insurance commissioner to develop exchange plan premium subsidies for people with modified adjusted gross income (MAGI) under 500% of the federal poverty level.

“The goal of the plan is to enable participating individuals to spend no more than 10% of their modified adjusted gross incomes on premiums,” according to the law text.

Today, the federal ACA premium tax credit program helps only people with MAGI under 400% of the federal poverty law.

The new law would not require any issuer to pay commissions, or even to make good on promises to pay commissions, but, in theory, if exchange plan issuers were paying commissions, middle-income Washington state residents could use the new state premium subsidies to buy coverage from issuers that pay agents, as well as to buy coverage from issuers that do not pay agents.

Resources

Information about S.B. 5526, including a copy of the engrossed substitute version of the text, is available here.

— Read Lawmakers Question ACA Basic Health Program Funding, on ThinkAdvisor.

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