By Arjun Teotia, Daniel R. Arnold, Richard M. Scheffler | Published April 21, 2023 in JAMA Health Network | Link to Full Article
Is a low-cost, county-based public insurance option associated with slower premium growth on the California Affordable Care Act exchange?
On Covered California (CC), the state-run Affordable Care Act (ACA) exchange in California, gross annual premiums for members have increased by 41% since CC started in 2014 ($9612 in 2022 vs $6804 in 2014).1 Through CC, individuals and their families can purchase private health insurance plans. Exchange coverage is generally intended for those who do not have access to health insurance through their employer, Medicare, or Medicaid. Nearly 90% of CC enrollees receive subsidized coverage in the form of reduced (often 0) premiums and reduced cost sharing.1 California is one of the few states that uses an active purchaser model for its exchange, which allows it to standardize benefits and cost sharing, selectively contract with insurers, and negotiate premiums.2 Premiums and insurers vary across the 19 regions of CC. Los Angeles (LA) has some of the lowest premiums and premium growth rates on CC. It is also the only region with a public plan—LA Care—which competes with 6 private insurers on the exchange.
Our work extends this research and is the first known study to empirically evaluate how a county-based public option performs in the ACA Marketplace in California. Specifically, we statistically evaluated whether LA Care was associated with reduced premium growth in LA compared with premium growth in other regions of CC.
By Richard M. Scheffler, Stephen M. Shortell | Published April 21, 2023 in The Commonwealth Fund | Link to Full Article
A public option is a government-established health insurance plan designed to inject more competition into the market and improve coverage affordability over time. Despite widespread support, little progress has been made at the federal or state level toward creating such a plan. We propose a public option plan for California, Golden Choice, that would be based on the state’s “delegated model” of health care under which provider organizations accept the financial risk for delivering health care services.
Even though a “public option” health plan has support from the Biden administration as well as the majority of voters, little progress has been made in creating one at the federal level.1 At the state and county levels, public options — simply, health insurance plans established by governmental entities — have been introduced to increase competition in the insurance market and improve affordability of health coverage over time. Governmental authorities can either directly administer these plans or establish a public–private partnership whereby the state sets requirements for private health plans to offer coverage.
Absent federal action, several states like Washington, Colorado, Nevada, and Minnesota have developed their own public option plans, with many other states in the process of developing plans.2 These plans rely on price caps or regulations, such as a requirement that insurers offer a public option plan to participate in Medicaid.3 To date, however, they have had little success in attracting enrollment or increasing competition among insurers to lower premiums.4
We propose a different type of public option plan for California. It would be based on the state’s “delegated model” of health care: provider organizations accept the financial risk of delivering health services, and their earnings are linked to their ability to keep patient care costs within a budget. Below we describe this new approach to a public option, which we call Golden Choice, and evaluate its potential impact on consumers’ health insurance premiums.
By Richard M. Scheffler, Stephen M. Shortell, and Daniel R. Arnold | Published April 21, 2022 | Link to Full Report
California’s challenge and opportunity is to provide accessible, affordable, equitable, and
continuously improving quality of care to its entire population. Governor Newsom has expanded
Medi-Cal to cover undocumented adult immigrants, which when combined with the Biden
administration’s premium subsidy increases, will result in near universal coverage for all in
California. Nonetheless, the affordability of such coverage remains a major challenge for the
state. A recent CHCF / NORC survey of Californians reported that just over half (52%) of
respondents said they skipped or postponed care due to costs. Additionally, more than 1 in 3
(36%) reported having medical debt, with 1 in 5 (19%) of those with medical debt owing $5,000
or more. Just over half (52%) of people with lower incomes surveyed reported having medical
debt, compared to 30% for those with higher incomes. Furthermore, Latino/x (52%) and Black
(48%) Californians were more likely to have medical debt than White (28%) and Asian (27%)
Californians. Between 2008 and 2018, Californians’ health care spending experienced a 68%
increase, compared to only a 16% increase in median household income. The growth in health
insurance premiums has far exceeded that of wages over the last two decades.
Building on the success of Covered California (the state’s innovative health insurance
exchange) and the presence of organized/integrated medical groups and independent practice
associations (IPAs) with experience in providing care under risk-adjusted per member per
month payments, the state has the potential to develop a public option that increases
competition in the health insurance market, which would lower price and can improve quality. A
public option plan (POP) is a state plan to offer health insurance for the purpose of increasing
competition, consumer choice, and affordability of coverage. Improvements in affordability
would be particularly important for low-income and minority populations, as their wages are
lower. We test the viability of our POP on Covered California and CalPERS. Furthermore, we
show how the L.A. Care county-based plan was successful in attaining enrollment while
lowering premium growth for all plans in the LA Regions of Covered California. At this time, we
are not recommending that a POP be offered on Covered California or by CalPERS. This
decision will need to be made by them, legislators, or the governor. Nonetheless, our analysis
shows that our POP would have lower premiums than many of the plans currently on the
This study was funded by the Commonwealth Fund (Grant No. 20223713).
By William Hsiao, Richard M. Scheffler | Published August 11, 2022 in Health Affairs Forefront | Link to Full Article
The inequitable, ineffective, and wasteful health care system in the US has been extensively analyzed and documented. In the last presidential election cycle, Senator Bernie Sanders (D-VT) proposed a single-payer system, Medicare for All, to solve our health care system deficiencies. He aroused wide public support for it. In early 2022, Congresswoman Pramila Jayapal (D-WA) led 120 congresspersons to introduce the Medicar for All Act of 2022 in the House (H.R. 1976). However, the passage of any federal single-payer bill seems dim because of the strong opposition of powerful vested interest groups and lack of a political majority. Hence, it’s more likely that states may take major initiatives in the intermediate future. What can states do?
By Richard M. Scheffler and Olivia T. Shane | Published December 6, 2021 in The Milbank Quarterly | Link to Full Article
Health equity has become a familiar buzzword in public health. There is, however, little consensus about what it means and how to measure it. California, the most diverse of all states, recently used principles of health equity in its response to the COVID-19 pandemic.
This article details the need for structural changes in the state that take health equity into account.
By Richard M. Scheffler and Surina A. Khurana | Published October 1, 2020 in Health Affairs Blog | Link to Full Article
Health policy, like most public policy, is autoregressive: The past is usually the best predictor of the future. Democratic vice presidential nominee Kamala Harris’ position on national health policy issues is well known from presidential debates and public statements; less is known about what she actually did while serving as the attorney general for the state of California from 2010 to 2017. Most of her record in health policy as attorney general was in three areas: antitrust (especially mergers and consolidation), pharmaceuticals, and support of the Affordable Care Act (ACA). It is fair to say that she has been very active and effective in all three areas.
By Daniel R. Arnold, Surina Khurana, and Brent D. Fulton | Published August 3, 2020 | Link to Report
This report provides a summary of the loans that the largest health systems in California received through Medicare Accelerated and Advance Payment Program. The financial health of these health systems should continue to be monitored during the duration of this pandemic.
By Richard M. Scheffler, Daniel R. Arnold, Surina Khurana, and Brent D. Fulton | Published July 9, 2020 | Link to Report
California Governor Gavin Newsom issued an executive order on March 19, 2020 that effectively prevented hospitals from performing elective procedures to free capacity for a possible surge of COVID-19 patients (order lifted on April 22, 2020). This report examines the financial status of the largest health systems in California, with a particular focus on their liquid assets for financial solvency. It then reports the amount they have received in CARES Act provider relief payments. Overall, 24% of the estimated reduction in net patient revenue was offset by direct CARES Act grants, but the offset varied widely by hospital. The report then presents the correlation between provider relief payments and a hospital’s private insurance share of patient revenue, operating margin, and the hospital market concentration of the county in which it resides. We find hospitals with a larger share of net patient revenue from private insurers and hospitals residing in highly concentrated hospital markets received larger payments per adjusted patient day. The results suggest that careful monitoring of future relief payments is needed.
By Richard M. Scheffler, Daniel R. Arnold, Brent D. Fulton, Alexandra Peltz, Taylor L. Wang, and John Swartzberg | Published June 25, 2020 | Link to Report
Based on recent antibody studies that report about a 5% prevalence in California, we estimate the health care costs of treating coronavirus disease 2019 (COVID-19) to be $2.4 billion in California — six times the annual cost of influenza in the state. Costs vary dramatically across counties due to significant differences in population size, health care prices, and payer mix. Estimated costs are $617 million in Los Angeles, $64 million in San Francisco, and $204 million in San Diego. The cost per infected person is $1,326, $1,774, $289, and $629 for commercial, Medicare, Medi-Cal/CHIP, and uninsured enrollees, respectively. We also calculate the costs under scenarios of 15%, 30% and 60% prevalence — the latter being a lower threshold of the prevalence generally assumed to be needed before herd immunity is achieved. Our costing model will be updated as new information about the prevalence and health care utilization and costs are reported for California.
By Stephen M. Shortell, Richard M. Scheffler, Shivi Anand, and Daniel Arnold | Published May 8, 2019 | Link to Report
This Brief highlights 1) California’s comparative advantage in having a large number of integrated care model physician organizations; 2) provides evidence on their ability to provide lower cost, higher quality value-based care; and 3) proposes a plan for expanding such models across the state to meet the ongoing needs and preferences of all Californians that will have universal health insurance coverage.