NEW ANALYSIS: The Nevada Public Option Could Threaten Access to Care

A new analysis by Wakely Consulting Group finds that the Nevada Public Option is likely to put increased financial hardship on Nevada’s health care providers and exacerbate our state’s already significant physician shortage – threatening access to health care for Nevada families.

The report also finds that the Public Option could have negative implications for health care competition in Nevada, deter potential new entrants, and cause some insurers to exit the market.

This new analysis demonstrates that creating an unaffordable, new state government-controlled public option could have serious consequences for health care providers and Nevada patients.

GET THE FACTS ON SB-420:

• 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 would reduce an insurer’s risk margins 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.

THE BOTTOM LINE: The state government-controlled health insurance system mandated by SB-420 will cause more harm than good across Nevada, including by exacerbating our state’s already significant physician shortage, and threatening access to quality care for Nevadans. Nevada families and patients cannot afford the Nevada Public Option.