Nevada recently passed law strengthening the state’s role in health care, a move that is being closely watched as an experiment to see what the future of health care might look like across the country.
Nevada’s Democratic lawmakers say the bill, passed in late May and signed by the governor this month, will cut costs for consumers by creating a “public option” that allows private insurers to offer cheaper health insurance. Republicans and health industry officials say this is overwhelming the government and could put health care providers out of business.
Meanwhile, Congress is seeking public comments on a national version of a public option structure. A public option is generally government health insurance, which is cheaper and competes with commercial insurers, but there are many variations that are being explored.
Democratic lawmakers in several states say they are frustrated with the slow pace of federal action and are moving forward with their own plans. Washington state was the first to pass a public option that went into effect this year, and Colorado Democratic governor Jared Polis signed his state’s public options bill on Wednesday. Democratic lawmakers in Illinois, New Mexico, and Oregon have also expressed an interest in strengthening their states’ role in health care.
Larry Devincenzi, owner of the Sugar Lime Rum Bar in Reno, supports the public option because he believes it can offer health insurance to his employees.
In Nevada, where the Democrats control governorship and state legislation, the law requires some insurers to offer bids for the public option starting in 2026. The goal is for these plans to be, on average, 5% cheaper than other popular, mid-priced plans that conform to the Affordable Care Act.
The aim would be to make the public option plans 15% cheaper over four years. Insurers who manage the state’s large Medicaid contracts would have to bid with the state to offer plans through the public option to many individuals whose incomes are low enough to qualify for ACA grants and small business owners. An enforcement mechanism for the reduced premiums has not yet been put in place.
There is no cost information on the plan as it stands, but an actuarial study is being conducted and the state plans to apply for a federal government exemption for the program.
Andy Johnson, bartender at Rum Sugar Lime, prepares drinks for guests.
Uninsured people in Nevada currently have a federally supported option, Medicaid, which they can qualify for based on income, but the public option is for those who earn too much to qualify, so it is available to Medicaid recipients and not available to some other residents.
The law would generally achieve lower costs by paying doctors, hospitals, and other care providers less than private insurers currently reimburse, although there is a lower limit: healthcare workers would not be paid lower than the reimbursement rates offered by Medicare.
Legislators say it is responding to increasing voter pressure to cut high healthcare costs. National health care expenditures rose 4.6% to $ 406.5 billion in 2019, faster than the 3.1% growth in 2018, according to the latest final federal data.
“Right now, in the midst of a pandemic where people have lost cover and are trying to get cover and can’t afford it, this is an important discussion,” said Senate Democratic Majority Leader Nicole Cannizzaro, who led the legislature supported. “We have to do something so that people have health insurance.”
Emergency room workers working at Renown Regional Medical Center in Reno.
Nevada Republicans said the program would cost the state hundreds of millions. “Almost every healthcare provider, chamber of commerce, and insurance company in the state of Nevada is against this law,” Michael J. McDonald, chairman of the Nevada Republican Party, wrote to Senate leaders in May.
Larry Devincenzi said he couldn’t afford health insurance for his employees at Rum Sugar Lime, a bar he owns in Reno. He supports the public option, he said, because he believes it will allow him to offer them health insurance.
“They are like family and we want them to be healthy,” said Mr. Devincenzi.
Devincenzi said his doctor had meanwhile written him privately on social media to tell him he was against a public option that would affect providers’ reimbursements.
Nevada’s Health Care Future – a group that is part of the Partnership for America’s Health Care Future, a national organization of hospitals, insurers, drug manufacturers, chambers of commerce, and other groups wanting to block Medicare for All or a public option – ran ads on Facebook, said , a “state government option could threaten the care your family relies on” and “exacerbate the shortage of doctors in our state.”
Some doctors say they fear the public option will discourage more doctors from accepting state insurance, which puts pressure on those who still do.
Dr. Frey, who is also president of Northern Nevada Emergency Physicians, fears the public option will restrict access to health care in rural areas.
Nevada was ranked the fourth worst state for doctors this year in a survey by Medscape, a WebMD medical website that included factors such as compensation.
“The current version of this bill, which ties everything to Medicare tariffs, will be a disaster for emergency doctors,” said Dr. Sven Inda, Reno Ambulance, in a written statement last month.
Critics warn that the consequences could affect health care, especially in rural areas.
“Getting a doctor to move to rural areas is a challenge at best,” said Dr. Bret Frey, Reno Emergency Physician and President of Northern Nevada Emergency Physicians. “If you put a bill like this in the books, it becomes almost impossible for a small state to improve access to the land.”
Proponents say hospitals will experience fewer losses related to treating the uninsured as more residents become insured.
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Legislation requires a study to determine how many people are eligible for the program. In total, around 400,000 people, or around 13% of the state, are uninsured in Nevada, according to a 2019 study. Approximately 85,000 residents of Nevada are currently enrolled on the state’s ACA health exchange.
In Washington, the Biden administration said in its proposed 2022 budget that the president supported the creation of a public option that would be available through the Affordable Care Act marketplaces.
Republicans in Congress largely agree in opposition, so a public option in a tightly divided Congress has little chance.
Write to Stephanie Armor at stephanie.armour@wsj.com and Jim Carlton at jim.carlton@wsj.com
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