Health Insurance Hospitals Supply of Medical Services

Impact of the public option in Minnesota

A Minnesota bill would expand the MinnesotaCare Medicaid system to incorproate a public option. The public option would reduce uninsurance rates, but would also have some negative impacts on providers. An FTI report (“Evaluating the Potential Impact of a Public Option on Minnesota’s Hospitals and Patients“) reviews the implications of the public option in Minnesota. In fact the study author, my colleague Jeremy Nighohossian, was interviewed by Inside Health Policy in a recenet article:

Key findings in the analysis, conducted by Jeremy Nighohossian of FTI Consulting, include that because Minnesota already has a low rate of uninsurance, the option would have only a slight effect on coverage expansion, lowering the rate from an estimated 4.7% to 4.2%. About 80,000 Minnesotans would be covered by the public option, about 50,000 of whom would switch from commercial coverage, including 18,000 small business employees. The other 30,200 would come from the ranks of the uninsured, including about 13,000 undocumented residents.
After reviewing the data collected from 122 hospitals, the analysis finds that all of them would see reduced revenue under the public option, with total losses hitting about $2.3 billion over 10 years. The paper finds rural and critical access hospitals would be particularly affected, and 11 of the states 76 CAHs would operate at high risk due to the public plan.
“Given the negative effects the Public Option may generate, combined with the limited improvements it would bring to the state’s uninsured rates, it is critical for Minnesota’s policymakers to study the far-reaching consequences of creating a MinnesotaCare Public Option and to consider how this policy might compare to other mechanisms to increase health care,” the paper concludes…

“We anticipate that, even with the small employer component removed, providers will still experience losses as individuals switch from private insurance to a government plan that reimburses at a much lower rate. However, if fewer individuals switch from their private to the public plan, then revenue losses may not be as great,” he [Nighohossian] adds.

You can read the full report authored by Jeremy Nighohossian here.