Employers increasingly support a public option for healthcare plans

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Skyrocketing healthcare costs have employers coming on board with more affordable solutions, namely a public option for their healthcare plans.

A new survey by the National Alliance of Healthcare Purchaser Coalitions has reported that nearly half of employers have a favorable view of a Medicare public option for their employees. Employers are especially supportive if the public option is universally available to all employees in the U.S.

Although the definition of a public option varies depending on which government leader is proposing it, this bill often means the government would cover essential health benefits in a federal healthcare plan, allowing those in employer-sponsored plans to choose if they want to enroll in a public option and receive subsidies for that coverage.

Employers are looking down the barrel when it comes to healthcare costs and employee well-being. While public option healthcare bills have faced many setbacks in the last decade — from being dropped as a provision in the Affordable Care Act in 2010 to being embraced in President Biden’s campaign in 2020, only to not show up in his 2022 fiscal budget — COVID may turn more heads in its direction.

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“Employers are very aware that they are paying disproportionately within the healthcare market with many of their providers,” says Michael Thompson, president and CEO of National Alliance. “Now employers are very open-minded to a more active regulatory environment in healthcare.”

National Alliance also found that 90% of employers want healthcare reform focused on hospital price transparency. Similarly, 95% of employers want drug price regulation implemented in the U.S. This seems reflective of the financial hardships witnessed in the last year: according to the Journal of the American Medical Association, Americans now face $140 billion in medical debt, with the average citizen owing more than $2,400.

To make matters worse, in 2020, the Kaiser Family Foundation determined that the average price of a family healthcare plan increased by 55% since 2010, approximately twice as fast as wages and inflation. With an estimated 157 million Americans relying on employer-sponsored coverage, these growing costs cannot be ignored.

“There's not universal support for a public option by any means within the employer community,” says Thompson. “But this degree of openness to government intervention has never been as great as it is today because of a market that's run amuck.”

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Thompson predicts that a public option would facilitate a far higher degree of transparency in terms of healthcare costs. In fact, 60% of employers found that it would be helpful to have access to healthcare prices within the public option, letting visibility give way to cost moderation.

“Employers are concerned that they're often paying three or four times what Medicare is paying for the same services, and oftentimes without any clear justification for doing that,” Thompson says. “They are paying these ungodly prices, even when public programs are paying much more moderate prices.”

In another 2020 report, the Kaiser Family Foundation found that private insurers paid almost double Medicare’s rates for all hospital services. When dealing with outpatient services, private insurers paid, on average, 264% of Medicare’s rates.

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Still, a national public option will not be possible until a bill is finally passed through the House and Senate — a feat it has yet to accomplish. However, Washington and Nevada have already enacted state-wide public options. Nevada’s law even stipulates that the public option plan must be at least 5% cheaper than the benchmark premium in each zip code. Colorado and Oregon look to also implement a public option to varying extents, be it through requiring carriers to standardize their health plans and reduce annual premiums or provide public health plans to small employers and those without insurance.

Whether or not a public option becomes an effective solution to healthcare costs in the near future, many employers will continue to feel that something has to change in the current healthcare system.

“I think that going forward, COVID will be a turning point,” says Thompson. “2022 will be the year we will remember because of the transition to a much more progressive, activated role for employers on behalf of their employees and families.”

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