Doctor holding piggy bank Apublic option offered alongside private insurance planstheoretically could be less expensive because such a plan wouldprobably reimburse providers at rates similar to Medicare orMedicaid. (Photo: Shutterstock)

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As debate around Medicare for All plans makes headlines and Americans continue tostruggle with health care cost and access issues, a new study has been released that examines fourdifferent approaches to expanding health care insurance.

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The report, from the American Academy of Actuaries HealthPractice Council, digs into the details of different approaches andoutlines what consumers and health care stakeholders might seeunder the different plans.

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Medicare for All rally signRelated: Medicare for All: Where the 2020 presidentialcandidates stand

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“Proposals to expand health insurance coverage through publicplans have important implications for consumers, taxpayers,insurers, employers, and health care providers, but thoseimplications can vary considerably based on the specifics of eachproposal,” said Academy Senior Health Fellow Cori Uccello, the leadauthor of the report. “The new paper details the key designfeatures that need to be considered when developing or evaluatingan expansion proposal.”

Public option under the ACA

The first option examined is one that actually was part of thefirst draft of the Affordable Care Act (ACA). Often called thepublic option, this would be a public-funded plan made available onthe ACA marketplace. It would be offered alongside privateinsurance plans and theoretically could be less expensive becausesuch a plan would probably reimburse providers at rates similar toMedicare or Medicaid.

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The report notes that numerous questions would have to beanswered: who would administer such a plan? Who would eligible? Howwould it be funded? Would it result in adverse selection—where thesickest and most expensive patients flock to a plan because otherplans are more expensive or restrictive?

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One issue that would be raised—as it was before the publicoption was dropped from the final ACA bill—is how such a plan wouldimpact providers and other insurers. Would the lower-costcompetition drive insurers out of markets, reducing competition andconsumers options? Would providers be willing to take lower rates,or would they refuse public plan enrollees?

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“Provider payment rates would need to be high enough to ensureadequate access to care, which could be especially problematic inrural areas with few providers,” the report notes.

Medicaid buy-in

Under this scenario, the Medicaid eligibility would be expanded,making the plan available to many more people than the low-incomeAmericans it is currently meant for.

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Since states oversee their Medicaid plans (with funding from thefederal government) questions would be raised about whether allstates would buy in, whether the coverage would follow ACAguidelines, and how premiums and reimbursement rates would beset.

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This approach could result in 50 different plans that varysubstantially on all those questions.

Medicare buy-in

Similar to the Medicaid buy-in, this approach would makeMedicare plans available to Americans under the age of 65. Theseplans would compete directly with private, employer-based insuranceand ACA individual market plans. However, as with the currentMedicare system, it would be regulated by the federal government,not the states.

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Issues with this approach include what limits would be set onwho could enroll—for example, would the Medicare buy-in only beavailable to those who cannot find employer-based insurance? Wouldthe coverage follow the Medicare model or the more expansiveMedicare Advantage option? Administration, benefit, and fundingquestions would be important points to iron out.

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As with any reform that greatly expands coverage, this plancould be very disruptive to current provider and insurancesystems.

Medicare for more, or for all

This is potentially the most disruptive solution—and the onewith the most questions. The report notes that funding for Medicareis complicated—and currently projected to have shortfalls in futureyears, even without expansion. So funding is a major question. Aswith any expansion of Medicare, it is unknown how the currentsystem would adjust to an influx of different populations—youngerand healthier enrollees, for example. Benefits would need to beadjusted, as would cost-sharing and supplemental plans.

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And aside from the disruption of private insurance carriers,many questions would remain about how providers would adjust to thenew system.

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“For those beneficiaries currently covered by Medicaid,providers would generally be paid more than under the currentsystem, and for commercially insured patients, provider paymentswould decrease,” the report said. “Even if on average providerrates remain unchanged, individual providers could be better orworse off, depending on their patient mix.”

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