Washington state to launch public option—but don't expect an onslaught of similar moves 

Washington will launch a public option health plan. (Sean Pavone/Getty)

Washington is set to become the first state to launch a public option insurance plan—but don’t expect the floodgates to open and other blue states to follow just yet. 

On Monday, Gov. Jay Inslee signed a bill that creates Cascade Care, a public plan offered on the state’s Affordable Care Act exchanges. Providers that participate in the plan’s network will be paid 160% of Medicare rates. 

The goal, Inslee said, is to ensure that there are plans available in all parts of the state and that enrollees spend 10% or less of their income on premiums. 

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“This is a tremendous accomplishment,” he said. “It builds on the work we’ve done over the past several years to expand and protect healthcare under the Affordable Care Act.” 

RELATED: What is ‘Medicare for All’? A look at 4 of the different possibilities 

While Washington may have found a way to pass a public option plan, similar ideas have stalled in other states. 

Federal legislators haven’t made headway on such proposals, either—a public option was famously killed in the ACA, and current plans like the Medicare at 50 bill or Medicare-X face steep opposition from the industry

Sabrina Corlette, a researcher and professor at the Georgetown University Center on Health Insurance Reforms, told FierceHealthcare that setting provider reimbursement rates is the central challenge for legislators looking to roll out a public option or other government plans.

“This concept of tying commercial payment rates to Medicare in statute has been, I think, a really huge hurdle,” Corlette said.

Industry groups have also pushed back against single-payer proposals, dubbed "Medicare for All," based on payment rates and have instead pushed for changes to shore up the existing exchanges such as reintroducing cost-sharing reduction payments and fostering greater competition. 

RELATED: The CBO analyzed what it would take to shift to a single-payer system. Here are 5 takeaways 

Corlette said that under Washington’s model, providers have the leverage to rebel against the established payment rates, if they choose. Because the state elected to launch a plan on the exchanges, providers are not required to accept the coverage, she said. 

Conversely, most providers would prefer to treat an insured patient whose plan pays closer to Medicare rates than to treat an uninsured patient, so their bottom lines would still benefit if more uninsured people enroll in the plans. 

However, if they do choose to push back, there’s no clear enforcement mechanism for the state to use, and that could pose another challenge for rollout—qualified health plans must meet certain network adequacy standards, Corlette said.

“I’m not seeing a clear sort of hammer that would come down on providers if they could refuse to participate in these networks,” Corlette said.

How Washington’s plan plays out will offer a vital case study for other states looking to try a public option or even a buy-in plan and could offer valuable tools for the many decision and pain points in the process.

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