Doctor holding piggy bank A public option offered alongside private insurance plans theoretically could be less expensive because such a plan would probably reimburse providers at rates similar to Medicare or Medicaid. (Photo: Shutterstock)

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

The report, from the American Academy of Actuaries Health Practice Council, digs into the details of different approaches and outlines what consumers and health care stakeholders might see under the different plans.

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“Proposals to expand health insurance coverage through public plans have important implications for consumers, taxpayers, insurers, employers, and health care providers, but those implications can vary considerably based on the specifics of each proposal,” said Academy Senior Health Fellow Cori Uccello, the lead author of the report. “The new paper details the key design features that need to be considered when developing or evaluating an expansion proposal.”

Public option under the ACA

The first option examined is one that actually was part of the first draft of the Affordable Care Act (ACA). Often called the public option, this would be a public-funded plan made available on the ACA marketplace. It would be offered alongside private insurance plans and theoretically could be less expensive because such a plan would probably reimburse providers at rates similar to Medicare or Medicaid.

The report notes that numerous questions would have to be answered: who would administer such a plan? Who would eligible? How would it be funded? Would it result in adverse selection—where the sickest and most expensive patients flock to a plan because other plans are more expensive or restrictive?

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

“Provider payment rates would need to be high enough to ensure adequate access to care, which could be especially problematic in rural 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-income Americans it is currently meant for.

Since states oversee their Medicaid plans (with funding from the federal government) questions would be raised about whether all states would buy in, whether the coverage would follow ACA guidelines, and how premiums and reimbursement rates would be set.

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

Medicare buy-in

Similar to the Medicaid buy-in, this approach would make Medicare plans available to Americans under the age of 65. These plans would compete directly with private, employer-based insurance and ACA individual market plans. However, as with the current Medicare system, it would be regulated by the federal government, not the states.

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

As with any reform that greatly expands coverage, this plan could be very disruptive to current provider and insurance systems.

Medicare for more, or for all

This is potentially the most disruptive solution—and the one with the most questions. The report notes that funding for Medicare is complicated—and currently projected to have shortfalls in future years, even without expansion. So funding is a major question. As with any expansion of Medicare, it is unknown how the current system would adjust to an influx of different populations—younger and healthier enrollees, for example. Benefits would need to be adjusted, as would cost-sharing and supplemental plans.

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

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