July 16, 2021
HR Policy and its American Health Policy Institute have urged Congress to "consider the potential unintended consequences that could negatively impact employer-sponsored health benefits” as it “develops public option legislation, or for that matter any coverage expansion bill."
Background: Senator Patty Murray (D-WA) and Rep Frank Pallone (D-NJ) requested information from the public regarding the design considerations for legislation to develop a public health insurance option.
Our comments noted that making “a public option available to all employees at their choice could create a serious adverse selection problem for employer plans resulting in substantially higher costs for the employees that choose to remain in the employer’s plan. On the other hand, a public option that is only available to employees that do not have an offer of affordable coverage…could result in substantial cost-shifting depending on the level of reimbursement rates in the public option.”
The comments recommended Congress maintain the “firewall” between employer coverage and the public option. The public option should only be available for employees working fewer than 30 hours per week that do not have an offer of affordable coverage.
Beware of cost-shifting to employer plans: “Increasing the number of Americans covered by programs whose reimbursement rates are below commercial rates will encourage providers to increase future commercial rates to make up for the lost revenue.”
Outlook: Early reports indicate the next budget reconciliation bill will not include a public option but will include expanding access to Medicaid, which would also lead to more cost-shifting to employer plans.