ICYMI: Nevada Public Option Could Increase State’s Already Significant Health Care Provider Shortage, New Actuarial Analysis Finds
Public Option Could Reduce Health Care Competition, Force Insurers to Exit Market & Threaten Access to Care
CARSON CITY, Nev. — In case you missed it, a new actuarial analysis conducted by the Wakely Consulting Group and released earlier this week finds that the Nevada Public Option risks further exacerbating Nevada’s already significant health care provider shortage. The report that the law could also reduce health care competition in Nevada, cause some insurers to exit the market, deter new entrants, put increased financial hardship on hospitals, and ultimately threaten access to care for Nevada patients.
Nevada is already suffering from a physician shortage, ranking 48th in the nation in primary care physicians per capita.
Key findings from the analysis include:
- Physician rates, on average, are likely already at or near 100% of Medicare Fee-For-Service. Because the Nevada Public Option statute has a floor for average physician reimbursement at 100% Medicare FFS little to no Nevada Public Option premium savings can be expected via physician reimbursement cuts. Further, Nevada is facing a significant provider shortage, which could be further exacerbated by reduced reimbursement rates.
- A 3% increase in loss ratio could reduce a low-cost insurer’s risk margin to 0%. The analysis notes that a 0% risk margin does not allow for an actuarially appropriate margin of error in estimating claims and risk adjustment expenses and could have negative implications for competition, deter new entrants, and potentially cause some insurers to exit the market.
- To reduce premiums by 16%, the hospitals’ reimbursement rates may need to be reduced by 25-30%. Cuts of this magnitude may put financial hardship on hospitals whose overall margins are sensitive to reimbursement rates in the commercial market.
- There are limitations in hospital reimbursement cuts as a source of premium savings.
- First, to the extent that hospital reimbursements approach 100% Medicare FFS, the statutory limit may be a factor. Second, hospitals are only mandated to contract with one public option plan.
- If each hospital does the minimum required by the Public Option statute, any potential hospital savings will be distributed across insurers further limiting each insurer’s ability to achieve a 16% premium reduction.
Read Wakely’s full actuarial analysis here.
Learn more about Nevada’s Health Care Future here.