Recent Developments in State Health Policy

This month, we’re sharing important developments in two state health policy efforts we covered previously: state efforts to advance a public option (with major developments coming out of the state of Washington) and Tennessee’s pursuit of a Medicaid Block Grant. Read on for more information about how recently-passed legislation in these states has advanced major items from their respective policy agendas.

Developments out of Washington State: Public Option

HPN has reported over the last year about state efforts to pursue public options, starting with a white paper on the subject last summer. While many states are focusing on leveraging their Medicaid programs, Washington’s Senate Bill 5526 advances a public option that will be administered through private insurance companies. The Governor signed the bill into law earlier this month.

“Cascade Care,” which will launch in 2021, calls for public option plans that are designed by the state but administered by at least one private insurer with which the Washington State Health Care Authority will contract, rather than offering the plans through the Medicaid program or otherwise through State government. The plans, which will be offered on the Marketplace side-by-side with commercial plans, will align with standardized benefits designed by the state (as required under the same legislation) for the Silver and Gold coverage levels and will cover a set of standard services. The plans must utilize a managed care model or integrated delivery system, and will also align with State value-based purchasing and meet other State standards for health promotion. . While Washington seeks for the plans to be offered statewide and available to all State residents, they are primarily targeted at those who do not have access to employer-sponsored insurance and are not eligible for public programs.

The public option plans are estimated to achieve savings of five to ten percent off premiums, as compared to similar commercial plans, through a cap on provider reimbursement rates and negotiation. With the goal of ensuring provider participation, the cap on rates starts at 160 percent of Medicare rates, with special provisions for Critical Access Hospitals, Sole Community Hospitals and primary care physicians. No additional state subsidies will be offered immediately, but the law calls for a study of the feasibility of offering such subsidies.

Developments out of Tennessee: Medicaid Block Grant

At the opposite end of the policy spectrum, Tennessee’s efforts to pursue a Medicaid block grant, which was part of our state healthcare reform roundup in March, took a major step forward this month with the passage of State legislation requiring the state to submit a block grant proposal to the Federal government within six months. This legislation calls for Tennessee to seek flexibility from Federal rules, and for Federal funding caps to be indexed for inflation and population growth. It does not address whether the Federal funding would increase if program enrollment grows—for instance, during economic downturns. While the Trump administration has expressed interest in supporting such plans, they have not released expected guidelines on doing so.


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