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Health Reform Proposals Could Reduce Spending, But Not Without Price Regulation

Analysis  |  By Jack O'Brien  
   October 16, 2019

A Commonwealth Fund study looked at eight health insurance reform options and the potential impact on the industry.

A range of healthcare reforms, from incremental improvements to the Affordable Care Act (ACA) to a single-payer system, could result in national health spending savings but might require certain tradeoffs to be effective, according to a new study.

The Commonwealth Fund and the Urban Institute released a report Wednesday morning examining eight health insurance reform plans and the potential impact on the industry.

While study's authors acknowledge that the optimal levels of provider payment rates in both a public option and single-payer system remain unknown, the rates would have to be carefully determined as they have a large impact on government healthcare costs. 

Linda Blumberg, Ph.D., Institute Fellow, Health Policy Center at the Urban Institute told HealthLeaders that an important aspect to consider when analyzing public option or single-payer proposals is the difference in insurance reimbursement rates. 

Under a public option plan, a smaller percentage of insurance rates would be regulated compared to a single-payer plan, which would require all rates to be regulated, Blumberg said, ultimately impacting how health systems operate. 

Related: Nonprofits Unsure About Medicare-for-All, But Want Health Reform

"The impact on providers, even if the rates come down, is going to be smaller [under a public option] than they are under a single-payer option where the regulated rates would affect all patients that would be seen by a provider," Blumberg said.

"On the side of additional revenues, if you're enhancing subsidies at the same time, you're also increasing the number of people accessing services. Additional revenues may be coming in from greater insurance coverage enrollment. All of those things need to be balanced in terms of thinking about the impact on providers." 

The study was released three weeks after another Commonwealth Fund report found that only 27% of surveyed Americans support a Medicare for All system, though 40% said they needed more information before forming an opinion.

Related: 27% Support Medicare for All, Though Most Need More Info

Broken down into three distinct categories, the policy proposals vary in terms of coverage goals, improved affordability, and national spending. 

For the most part, models that bolster the ACA would improve premium and cost-sharing subsidies and contain costs through the introduction of a public option.

The models built on a functioning public option would rely on auto-enrollment for U.S. residents, reduce employer coverage by more than 10%, and reduce national spending modestly. 

Meanwhile, the elimination of the private insurance market under a single-payer system was represented in two models which differed on cost-sharing measures and extending coverage to undocumented immigrants.

Related: Healthcare Remains Primary Concern for Voters, With Strong Support for 'Medicare-for-All'

The study's authors stressed that the proposals are not proxies for actual bills or plans considered by Democratic lawmakers and presidential candidates, but the models do provide insights into how similar policy proposals might impact insurers, providers, and patients. 

John Holahan, Ph.D., Institute Fellow, Health Policy Center at the Urban Institute told HealthLeaders that the study's cost estimates were based on provider payment rates set at the Medicare level.

Holahan added that depending on the specific policy put into place, the costs could be higher than the study estimated. 

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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