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Public option and capped provider payment rate proposals that exempt rural areas
Public option and capped provider payment rate proposals that exempt rural areas
- Collection:
- Health Policy and Services Research
- Author(s):
- Holahan, John, author
Simpson, Michael, author - Contributor(s):
- Urban Institute, issuing body.
- Publication:
- Washington, DC : Urban Institute, March 2021
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Cities
Costs and Cost Analysis -- economics
Employer Health Costs -- statistics & numerical data
Insurance -- economics
National Health Insurance, United States -- statistics & numerical data
Urban Health Services -- supply & distribution
United States - Genre(s):
- Technical Report
- Abstract:
- In recent years, we have completed extensive analyses of proposals that would introduce a public health insurance option or cap provider payment rates for all insurers, as in Medicare Advantage (Blumberg et al. 2019, 2020; Blumberg, Simpson, and Buettgens 2019). In this and two accompanying papers (Holahan and Simpson 2021a, 2021b), we analyze such reforms that apply to the nongroup health insurance market only and some that would apply both in the nongroup and employer health insurance markets. Here, we explore the coverage and cost impacts of introducing these reforms in urban areas only, leaving rural areas’ insurance markets unchanged. This reform is motivated by concern that providers in rural areas, both physicians and hospitals, are under considerable financial stress. It is often difficult to attract physicians to rural areas, and a large number of rural hospitals face threats of closure or shrinkage. Constraints on payment rates could exacerbate these problems. On the other hand, exempting rural areas from payment constraints would mean rural residents and employers pay more for coverage. We show exempting rural areas in these reforms would not significantly affect aggregate household and employer spending, federal government spending, or overall spending. This is because the number of people living in areas we characterize as rural is relatively small. Rural providers are, by design, better off if exempted from the reforms we examine. However, more rural residents would be uninsured and household and employer spending would generally be higher. Moreover, more federal dollars will flow to rural areas if they are exempted from the reforms. As noted, we examine public option and capped provider payment rate proposals that would be introduced solely in the nongroup market as well as in both the nongroup and employer markets. The public option would be a government-developed insurance plan that pays professionals (doctors and other health providers), hospitals, and prescription drug manufacturers according to a fee schedule that uses lower rates than those typical of commercial insurers. Discussions of a public option typically center around provider payment rates, specifically, whether they should be set at Medicare rates or some multiple thereof. Savings are greatest when Medicare rates (or lower rates) are used, but that may limit provider participation. Conversely, setting rates too far above Medicare levels could result in very little savings. But providers would be more likely to participate and would see little reduction in revenue.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-DC license. (More information)
- Extent:
- 1 online resource (1 PDF file (29 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 9918316884706676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918316884706676