April showers bring…cozy rainy days to catch up on the latest health policy research. This month, we read studies that evaluated the cost and health equity implications of public option plans and provider price regulation. We also got caught up on self-reported insurance coverage during the Medicaid unwinding.

Assessing Access and Equity Concerns under a Choose Medicare Act Public Option and a Variation that Caps Provider Payments Rates

Linda J. Blumberg and Michael Simpson. Urban Institute. April 9, 2024. Available here.

In this study, researchers from the Urban Institute compared the cost and health equity implications of the original Choose Medicare Act (“public option”) and the modified Choose Medicare Act (“capped rates”) which would cap provider prices for private insurers. Researchers used the Health Insurance Policy Simulation Model (HIPSM), which simulates insurance market changes for hospital referral regions (HRRs), to model the health care spending and equity effects of each reform.

What it Finds 

• Nearly three times as many people would be affected by capped rates (170.9 million) as by the public option (61.8 million people).
  • Capped rates would affect all enrollees covered through private nongroup and employer-based markets, while the public option would affect enrollees of private nongroup markets and employees who are offered the public option by their employer.
• The capped rates reform would produce three times the savings of the public option: aggregate spending would be reduced by 8.4 percent under capped rates and 2.4 percent with the public option.
  • Over the next decade, these savings would equate to $3.3 trillion with capped rates and $815 billion with the public option.
• Spending reductions are unequal across HRRs: under capped rate reform, there is a 5.3 percent difference in spending reduction between the HRRs with the greatest and least effects (11.2 percent versus 5.9 percent, respectively).
  • In the HRRs with the greatest effect for the public option, spending would decrease by 4.3 percent, with a 1.3 percent reduction in HRRs of least effect.
• Despite racial and ethnic differences in impact and cost reductions, the authors find no evidence that either reform would reduce access or affordability for minority groups.

Why it Matters 

United States health care spending is the highest in the developed world, without commensurate quality care or outcomes. Private insurance substantially contributes to increasing costs and pays providers the highest rates. Consequently, policies that reduce spending for private and employer-sponsored insurance could greatly influence cost containment. Opponents of spending reforms argue that lower costs would worsen care or exacerbate health disparities. However, evidence suggests that lower provider rates could incentivize quality and efficient care delivery, and this study finds no effect on access or affordability for minority groups.

Public Option and Capped Rate Reforms Would Have Limited Effects on Health Systems’ Financial Health without Worsening Racial and Ethnic Disparities in Access to Care

Fredric Blavin. Urban Institute. April 9, 2024. Available here.

To further assess the public option and capped rates, Urban Institute researchers examined the reforms’ implications for hospital finances and service populations. Researchers mirrored the methodology of Blumerberg et al (2024), then combined the HRR-level analysis with health system-level data to determine the financial characteristics of the systems most and least affected by either reform. Researchers also assessed potential access changes for the health systems’ service populations.

What it Finds 

• Health systems and hospitals with the greatest financial health––those with the largest operating margins, cash on hand, and commercial-to-Medicare price ratios––are more likely to experience greater spending reductions under both reforms.
• For residents in the most affected areas, the public option would reduce per resident spending by $127 (4.3 percent), almost a third of capped rate reform savings ($332 per resident, 11.2 percent).
• With either the public option or capped rate reform, spending reductions differ amongst racial and ethnic groups, with Asian and Pacific Island populations experiencing the greatest spending reductions and Black non-Hispanic populations experiencing the least. 
• The authors find no evidence that either reform would reduce access or affordability for minority and multiracial populations.

Why it Matters

Hospital spending accounts for nearly one third of total health expenditures. Despite concerns of closures following revenue reductions, many hospitals and health systems have the financial stability to withstand spending changes. Under either the public option or capped rates, revenue reductions would be greatest in the hospitals and health systems most equipped and financially positioned to withstand potential revenue shortfalls without threatening to patients’ access to care or exacerbating existing health disparities.

Survey-Reported Coverage in 2019-2022 and Implications for Unwinding Medicaid Continuous Eligibility

Adrianna McIntyre, Rebecca B. Smith, and Benjamin D. Sommers. JAMA Health Forum. April 5, 2024. Available here.

Researchers from Harvard conducted a cross-sectional study of survey data and CMS administrative data to assess differences in enrollees’ self-perception of coverage and their reported enrollment in Medicaid, private insurance, or neither.

What it Finds 

• From 2019-2022, Medicaid enrollment grew by 5.2 percent, but self-reported Medicaid coverage grew only 1.3 percent; roughly 80 percent of pandemic-era enrollment gains did not produce reductions in self-reported uninsurance.
• As of 2022, all 50 states and DC had a gap in self-reported coverage and administrative coverage data.
  • Idaho had the lowest gap (1.3 percent), while DC had the greatest gap (19 percent).
• From 2019 to 2022, the share of individuals with self-reported Medicaid and private coverage increased from 13.9 percent to 16.1 percent.
  • Nearly 1 percent of this private insurance increase is attributable to nongroup and Marketplace insurance, while 1.7 percent is attributable to employer-sponsored insurance.

Why it Matters 

Pandemic era requirements that states maintain continuous Medicaid coverage led to significant gains in Medicaid enrollment. The absence of a regularized Medicaid renewal process may have led many people with Medicaid coverage to be unaware that they remained enrolled. Many of these individuals may have also been enrolled in an employer plan or other form of coverage. Though further research is needed, simultaneous enrollment in Medicaid and private insurance could raise cost concerns: as states continue to pay a monthly capitation payment for Medicaid beneficiaries, these beneficiaries may also be paying for private insurance, increasing total spending.