Future of U.S. Healthcare May Be Playing Out in Nevada

Nevada recently adopted a law that increases the state’s role in healthcare, a move that is being closely watched as an experiment in what the future of healthcare might look like across the nation.

Nevada’s Democratic lawmakers say the law, passed at the end of May and signed this month by the governor, will reduce costs for consumers by creating a “public option” that would have private insurers offer lower-priced health plans. Republicans and healthcare industry officials say it represents government overreach and could drive healthcare providers out of business.

Meanwhile, Congress is seeking public comment on a national version of a public-option structure. A public option generally involves a government-run health insurance agency that is lower-priced and competes with commercial insurers, but there are many variations that are being explored.

Democratic lawmakers in several states say they are frustrated by the sluggish pace of federal action and are moving ahead with their own plans. Washington state was the first to pass a public option, which took effect this year, and Colorado Democratic

Gov. Jared Polis

signed his state’s public option legislation Wednesday. Democratic lawmakers in Illinois, New Mexico and Oregon also have expressed interest in increasing their states’ role in healthcare.

Larry Devincenzi, owner of the bar Rum Sugar Lime in Reno, says he supports the public option because he believes it will enable him to offer his employees health coverage.

In Nevada, where Democrats control the governorship and state Legislature, the law requires some insurers to bid to offer plans starting in 2026 on the public option. The goal is to have these plans priced 5{556dae1e865ad4cb1aff81550537a4c07ba73ce20e0d02df2b728475a26ac49a} less than other popular, mid-priced plans by average that comply with the Affordable Care Act.

The aim would be to have the public-option plans priced at 15{556dae1e865ad4cb1aff81550537a4c07ba73ce20e0d02df2b728475a26ac49a} less over four years. Insurers that administer the state’s large Medicaid contracts would be required to bid with the state to offer plans through the public option to many individuals whose income is low enough to qualify for ACA subsidies, as well as small businesses. Any enforcement mechanism for the reduced premiums hasn’t been established yet.

There isn’t any cost information available on the plan in its current form, but an actuarial study will be done and the state plans to apply for a waiver from the federal government for the program.

Andy Johnson, a bartender at Rum Sugar Lime, making drinks for patrons.

Uninsured people in Nevada currently have a state-backed option, Medicaid, that they may qualify for based on income, but the public option is intended for those earning too much to qualify, so it isn’t available to Medicaid recipients and some other residents.

The law would generally achieve lower costs by paying doctors, hospitals and other providers less than what private insurers currently reimburse, though there is a floor: Health workers would be paid no lower than rates of reimbursement offered by Medicare.

Lawmakers say they are responding to mounting pressure from constituents for relief from high healthcare costs. National out-of-pocket spending on health care grew 4.6{556dae1e865ad4cb1aff81550537a4c07ba73ce20e0d02df2b728475a26ac49a} in 2019 to $406.5 billion, which was faster than the 3.1{556dae1e865ad4cb1aff81550537a4c07ba73ce20e0d02df2b728475a26ac49a} growth in 2018, according to the most recent final federal data.

“Especially now, in the middle of a pandemic, where people lost coverage and are trying to get coverage and can’t afford it, it’s an important discussion,” said state Senate Majority Leader Nicole Cannizzaro, a Democrat who sponsored the legislation. “We have to do something to get people health coverage.”

ER staff working at Renown Regional Medical Center in Reno.

Nevada Republicans said the program would cost the state hundreds of millions. “Nearly every healthcare provider, chamber of commerce, and insurance company in the state of Nevada is against this bill,” Michael J. McDonald, chairman of the Nevada Republican Party, wrote in May to Senate leaders.

Larry Devincenzi said he has been unable to afford health insurance for his staff at Rum Sugar Lime, a bar he owns in Reno. He supports the public option, he said, because he believes it will enable him to offer them health coverage.

“They’re like a family and we want them to be healthy,” said Mr. Devincenzi.

Mr. Devincenzi said his doctor, meanwhile, messaged him privately on social media to tell him he opposed a public option that would hurt providers’ reimbursements.

Nevada’s Health Care Future—a group that is part of the Partnership for America’s Health Care Future, a national organization of hospitals, insurers, drug makers, chambers of commerce and other groups seeking to block Medicare for All or a public option—ran ads on Facebook saying a “state government option could threaten the care your family relies on” and “worsen our state’s doctor shortage.”

Some doctors say they worry the public option will drive more physicians away from accepting government-run insurance, putting pressure on the ones who still will.

Dr. Frey, who is also president of Northern Nevada Emergency Physicians, worries the public option will reduce access to healthcare in rural areas.

Nevada ranked as the fourth-worst state for doctors to work this year in a survey by Medscape, a medical website owned by WebMD, which included factors such as compensation.

“The current rendition of this bill, tying everything to Medicare rates, will be a disaster for ER docs,” Dr. Sven Inda, an emergency room doctor in Reno, said in a written statement last month.

Critics warn the fallout could lessen healthcare services, especially in rural areas.

“Getting a physician to move to rural areas is challenging at best,” said Dr. Bret Frey, an emergency room doctor in Reno and president of Northern Nevada Emergency Physicians. “When you put a bill like this on the books, it becomes almost impossible for a small state to improve rural access.”

Supporters say that because more residents will be covered, hospitals will see smaller losses related to treating the uninsured.


Do you think more states will follow Nevada’s lead and pass a public option? Why or why not? Join the conversation below.

The legislation requires a study to determine how many people would be eligible for the program. In all, about 400,000 people are uninsured in Nevada, or about 13{556dae1e865ad4cb1aff81550537a4c07ba73ce20e0d02df2b728475a26ac49a} of the state, according to a 2019 study. About 85,000 Nevadans are currently enrolled in the state’s ACA health exchange.

In Washington, the Biden administration said in its proposed fiscal 2022 budget that the president supports creating a public option that would be available through the Affordable Care Act marketplaces.

Congressional Republicans are largely united in opposition, leaving a public option slim odds in a narrowly divided Congress.

Write to Stephanie Armour at [email protected] and Jim Carlton at [email protected]

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