{"id":6846,"date":"2022-08-03T11:28:02","date_gmt":"2022-08-03T15:28:02","guid":{"rendered":"http:\/\/chirblog.org\/?p=6846"},"modified":"2022-08-03T11:35:40","modified_gmt":"2022-08-03T15:35:40","slug":"data-say-offering-public-option-plans-workers-employer-sponsored-insurance","status":"publish","type":"post","link":"https:\/\/chirblog.org\/data-say-offering-public-option-plans-workers-employer-sponsored-insurance\/","title":{"rendered":"What the Data Say About Offering Public Option Plans to Workers with Employer-Sponsored Insurance"},"content":{"rendered":"

Employer-sponsored insurance is the largest source of health coverage<\/a> in the U.S., covering more than nine times the number of people than in the individual market. But the employer market\u2019s historic status as the \u201cbackbone<\/a>\u201d of the U.S. health care system is imperiled by rising health care costs. A public health insurance option\u2014frequently floated as a policy to improve coverage access and affordability in the individual and small group market\u2014could help reduce health care costs and expand access to coverage for people with job-based insurance, and has received increasing support among employers.<\/p>\n

The Growing Affordability Crisis in Employer-Sponsored Insurance<\/strong><\/p>\n

For many workers, the financial protection provided by employer-sponsored insurance is weakening as they contribute more in premiums and pay higher deductibles<\/a> while wages remain stagnant. According to an analysis<\/a> by the Commonwealth Fund, the average employee premium contributions and deductibles accounted for 11.6 percent of the median household income in 2020, up from 9.1 percent in 2010. In five states<\/a>\u2014Florida, Louisiana, Mississippi, New Mexico, Oklahoma\u2014these two costs added up to between 15 and 20 percent of median household income. As a result of these high costs, individuals are foregoing needed care and often struggle to pay their medical bills or accumulate debt when they do get care.<\/p>\n

Employers recognize<\/a> that affordability is an urgent concern for their bottom lines and their workers, and some employers<\/a> and purchasing coalitions<\/a> are experimenting with ways to reduce costs. But taking on the underlying drivers of health care cost growth can be challenging for the average employer, particularly in markets dominated by a small number of health care systems who often demand very high prices<\/a>.<\/p>\n

The vast majority of employers<\/a> back policy changes to reduce health care prices, including regulating hospital rates (80 percent) and drug prices (95 percent). Employers also increasingly support a public health insurance option, with nearly half (47 percent) of employers with favorable views towards a public option based on Medicare and a majority (60 percent) believing that a public option whose pricing was available to all plan sponsors would be somewhat or very helpful at improving affordability. Likely voters agree<\/a>, with 59 percent\u2014including a majority of both Democrat and Republican voters\u2014supporting a public option plan that is available to employers.<\/p>\n

Benefits to Offering a Public Option to Employers <\/strong><\/p>\n

Although public option designs can vary<\/a>, the archetype is a publicly administered and funded health plan with government-set reimbursement rates. A related alternative would allow employers to continue to self-fund<\/a> their plans but leverage a public option for plan administrative services only, with government-set rates and networks. Experts studying these models have found significant benefits for employers, employees, and overall health care costs.<\/p>\n

As several<\/a> studies<\/a> discuss<\/a>, public option plans typically offer three direct mechanisms for reducing costs relative to private plans: (1) lower provider reimbursement rates and drug payments; (2) lower administrative expenses, due to efficiencies of scale and other operational differences; and (3) elimination of a profit margin. These differences are expected to translate into reduced premiums for employers and employees without sacrificing comprehensive coverage. Indirectly, competition from a public option also could drive down premiums among private plans. A public option also would increase federal tax revenues as employers shift spending from health insurance to wages because the latter is taxable as income but the former is not.<\/p>\n

A series of analyses<\/a> by the Urban Institute provide a sense of the magnitude of savings. Recent estimates<\/a> show that if employers are offered a public option plan that sets provider reimbursement somewhere between Medicare and commercial rates (\u201cMedicare-plus\u201d):<\/p>\n