January 29, 2025 - Modern Healthcare
Nona Tepper

Hospitals cry foul as public option enrollment rises

Promising signs for "public option" health plans sold on state health insurance exchanges spell bad news for providers, who say they're squeezed by low reimbursements.

Colorado and Washington are the only states that have government-sponsored — but privately administered — public options on their marketplaces. Nevada is set to join them soon and other states may follow. Public option enrollment climbed on Connect for Health Colorado and Washington Healthplanfinder during the open enrollment period that ended Jan. 15, the states reported.

The major selling point of the public option is that it's supposed to reduce costs for insurance customers. Part of that is removing profit from the equation and subjecting health insurers to more competition. But the real key is holding down provider reimbursements by pegging them to Medicare rates plus an add-on.

Colorado Option plans must pay providers at least 155% of Medicare rates while the Cascade Select plans in Washington cap payments at 160% of Medicare reimbursements. Washington requires hospitals to be in-network with at least one Cascade Select plan.