Nov 20, 2019

Blue states' watered-down health reforms

Illustration: Aïda Amer/Axios

Even the most ambitious Democratic-controlled states have ended up with new health plans that are much more moderate than anything being proposed by Democratic presidential candidates — or even what was initially proposed in their states.

Why it matters: States are significantly more limited in their authority than the federal government, but the efforts of Colorado, Washington and California show just how hard massive health care disruption is.

Driving the news: Colorado state agencies last week released their final proposal for the state's public option, which is scheduled to become available in 2022.

  • While an earlier draft had proposed hospital payment rates that were between 175% and 225% of Medicare, the updated version says that each hospital's rate will be determined individually through a formula that is yet to be developed — punting the decision.
  • "Obviously, where those prices ultimately land will have a big effect ton whether this proposal actually reduces spending. If the state cannot hold the line, then the potential for this type of proposal to reduce spending evaporates," the Brookings Institution's Matthew Fielder said.
  • The proposal also relies on private insurers to offer the plan — meaning that while it's highly regulated, it is not a fully government-run plan.

The big picture: Colorado's situation — along with other states' — provides a real-world contrast with some Democrats' plans to eliminate private insurance and slash provider payment rates.

  • Washington's public option is similarly structured as a partnership with private insurers, and while it caps provider rates at 160% of Medicare, this is a higher rate than initially proposed, as the NYT reported. Like Colorado's plan, provider participation is voluntary.
  • California took a different approach, expanding eligibility for Affordable Care Act enrollees and paying for the health benefits of some unauthorized immigrants.

What they're saying: "As much as there was a whole lot of energy behind more government intervention in health care after the 2018 election, I think that energy ran smack into some practical issues," Georgetown's Sabrina Corlette said.

The bottom line: Colorado's public option "demonstrates just how much space there is between doing nothing and implementing Medicare for All when trying to increase access to insurance and reduce costs," said Avalere's Chris Sloan.

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Illustration: Aïda Amer/Axios

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Health care spending grew again in 2018 thanks to higher prices

Data: Centers for Medicare & Medicaid Services' Office of the Actuary; Chart: Axios Visuals

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Health care spending grew at a faster rate in 2018

Data: Centers for Medicare & Medicaid Services' Office of the Actuary; Chart: Axios Visuals

Americans spent $3.65 trillion on health care in 2018 — 4.6% more than the year before. That growth also was higher than the 4.2% rate from 2017, according to revised figures from independent federal actuaries.

Between the lines: U.S. health care spending climbed again not because people went to the doctor or hospital more frequently, but because the industry charged higher prices. And private health insurers didn't do a particularly good job negotiating lower rates.

Go deeperArrowDec 5, 2019