For all of the gnashing of teeth by some around this year’s “public option” legislation, I think it’s possible this legislation will prove itself to be more modest in scope than those opposed might have argued.
In the end, the bill is a modest but important step forward in innovation in health care. It’s neither a panacea nor a signal of the end of times.
It’s a strategy to use the purchasing power of the state to try to shape a better health care product. It’s an effort to push the market to do more in areas where policy makers – and the broader community – think that the health care sector isn’t doing enough: on pricing and transparency, in particular.
This is something the State of Washington already does through Medicaid, through PEBB, and shortly through SEBB.
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Sure, there are requirements about benefits and rates in the public option bill, but those end up being relatively modest – despite some legitimate concerns otherwise. Standardized benefits already exist in states like California, where an “active purchaser” model has helped hold down the cost trend. Fixing rates to a Medicare index might bring some pressure to select high-cost providers, but this reckoning has been foreshadowed for years. Moreover, the final indexing of 160% of Medicare means most of the primary care providers will have little pressure from the cap.
In other words, this policy language incorporates some of the best learnings from other states, from things that have been in place for some time.
All that said, while I think the bill itself is meaningful but modest, there are some very important takeaways from this legislation that policy wonks should note.
1. This bill sets up a framework for future price management through rate setting
The original idea for rates in this bill was for an insurance product with reimbursement linked to a 100% Medicare index. That was a big deal. That would have moved the market in significant ways that could have re-shaped the entire individual and small group markets. That assumes, of course, that the model was successfully implemented to begin with.
That’s one reason this bill is important: it creates a framework for future rate setting activity while giving the entire model some time to get set up.
The relaxed number of 160% of Medicare increases the likelihood of providers contracting for this product in the near term, compared with rates at 100%.
But, while there is a lot of consternation about the 100% rate idea, there are a number of providers who do just fine at 100% of Medicare rates. In fact, Children’s Hospital or pediatricians, which take a number of kids at Medicaid rates, would probably be just fine with Medicare rates, which would be a relative increase in payment.
With this bill, moving from 160% of Medicare to 140% or 120% or 100% of Medicare in the future is a relatively easy legislative change. The big structure is now built. If the legislature wants to address concerns about cost in the commercial market, they now have a mechanism in place. Every time rates are moved down in this one line in statute – from 160% to something lower – there will likely be a reduction in premium costs, and a consequent reaction by other plans in the market to try to stay competitive with those new rates.
As other plans feel the sensitivity of price competition, it will make it more difficult for providers to dodge one specific product if all carrier products are increasingly applying downward pressure as a result.
2. Sen. David Frockt emerges from this as a heavyweight in health policy
There are a few lions in the legislature when it comes to health policy. With this legislation, Sen. David Frockt has now joined that crowd.
Not only was he a central figure on this bill in the Senate as the bill’s sponsor, where he had to face down advocates and build support in his caucus, it turns out he had to face down the House as well.
As the bill ended its final negotiation, the House adopted final language based on conversations with plans. The idea was to make the product as workable as possible, and getting to conclusion was not easy.
However, what appeared to be the final version coming out of the House, didn’t get a sign off from the Senate side. For folks that follow this stuff closely, that’s not always how health policy works in the Washington State legislature. What appeared in my inbox as a simple statement wasn’t so simple behind the scenes.
So, for the Senate to push back on the House, after what appeared to be a final deal with stakeholders, meant Frockt had the votes and the trust of his caucus. It meant he had the full support to go to bat on their behalf on a bill that strong Democratic majorities in caucus – and the governor – wanted to see passed. This was a gamble, no easy feat, and one that helped put Frockt in the middle of any health policy conversation in legislatures to come.
3. This shows the political lift it takes to get even modest changes done
For a meaningful but modest bill, this was a big political lift. While they should not have been, many stakeholders were shocked to see this bill get dropped, and shocked to see that it had legs.
That surprise activated a strong push back on this bill from health plans. No health plans were immediately supportive. Many were actively oppositional. AHIP came in with strong opposition, which to some legislators, came off as condescending and arrogant.
So, the backlash against this bill was significant – both on policy grounds and, for some, as a result of being surprised.
It used to be that was enough to kill a piece of insurance legislation. When the health plans lined up against something, particularly commercial plans, that was usually enough to kill a bill. This experience shows that’s not enough anymore, at least not with the current majorities in the legislature.
WSMA earns points for being among the savviest advocacy groups on this topic. They stayed engaged throughout, withheld formalizing support or opposition, and ultimately were at the table at the end to earn changes to the rate setting element that would impact hospitals far more than it would impact most physicians.
Finally, one lesson some proponents took away from this experience is this: “If the industry is going to fight us so strongly on modest changes, we might as well fight them on big changes and be bold in our next steps.”
It’s hard to argue with that logic, particularly as Democratic majorities seem strong and safe for the time being.
So, takeaways here:
- Democratic majorities are increasingly stronger than industry opposition
- Staying at the table wins more than early opposition
- Expect emboldened Democratic majorities willing to push even more meaningful progressive ideas and reforms
4. The experience of this bill shows what language can do to build or undermine support
The term “public option” is code for progressives. Coming out of the ACA, where a public option was stripped from a final compromise, the “public option” moniker has become a symbol for those wishing to push beyond the messy compromise of the ACA. If “Medicare for All” is a panacea to some liberals, the “public option” is the sort of middle ground between the current and imagined future state.
So, naming something a public option will likely garner support from blue state legislators in a way that calling this bill “a modified state purchasing model” simply wouldn’t.
You can see that on the right, too. In Alaska, the policy discussion is around a “private option,” something that has become a rallying cry for reformists from a conservative bent. In Utah, in a more nuanced approach, the “Per Capita Cap Plan,” language is used instead of a “block grant” to try to mitigate sensitivities grown out of recent activity in the legislature and the ballot box.
The lesson here is that language matters. In the coming war on the left about whether to adopt a single payer model, I think the lesson for advocates is to work to define what the term means, rather than fighting the term. The power of that term on the left isn’t going anywhere – in fact it’s growing.
Bottom line: The big takeaways from the public option fight in this year’s session are not about the bill itself. They are about the context and what the win for Democrats in this session will mean in future ones.
Gov. Inslee may or may not be governor in 2021. But the political currents that made this bill such an important one, one that elevated Sen. Frockt, showed the importance of language, and which created a framework for even more rate setting activity, those currents are not going away.
In fact, they are building.
This story was also cross-posted on our sister site, State of Reform.