Gov. Lombardo rolls out plan for changes to Nevada Public Option

(The Center Square) – After proposing to “substantially revise” the Nevada Public Option in his State of the State address, Nevada Gov. Joe Lombardo rolled out a plan this week to change it into a market stabilization program.

Lombardo’s office argues that doing so will provide the state’s individual health insurance market with more stability.

According to the governor’s office, the state “intends to accomplish this new plan” through federal funds made possible by a waiver application to “finance a reinsurance program for all health insurers operating in the individual market, establish a new quality incentive payment program to reward high-performing insurers that offer public option plans and meet certain metrics or quality indicators, and fund new initiatives designed to increase the state’s health care workforce capacity to improve access and lower the cost of health care…”

Lombardo said in a news release this week that reinsurance is a proven method that will protect consumers.

“My plan will help Nevadans avoid the higher costs of insurance they would face through the cost-shifts driven by the public option,” the governor said.

Geoffrey Lawrence, research director for the Nevada Policy Research Institute, a free-market think tank, told The Center Square the plan is a “positive” step.

“One of the key problems with Medicaid generally is that its reimbursement rates to providers are lower than reimbursement rates negotiated with private insurance companies,” he said. “The result is that many providers choose not to accept Medicaid patients. Only about four out of five medical providers in Nevada accept new Medicaid patients, with variations depending on specialty.”

When more people are forced into the Medicaid network, it results in what Lawrence called greater demand for a limited quantity of services while also making it more difficult for everyone in-network to get the care they need. Appointments then become unavailable and people experience long wait times, according to Lawrence.

“The so-called ‘public option’ threatened to exacerbate this problem by shifting a bunch of privately insured individuals into the state Medicaid network,” Lawrence said. “Governor Lombardo has been creative in his implementation of the law, by converting the program into a reinsurance program that ultimately works like a high-risk pool.”

Lawrence added that most states have high-risk pools to compensate insurers for the additional costs of caring for individuals with very serious and costly conditions like cancer. Nevada is among a small handful of states that doesn’t have a high-risk pool.

“This approach is more efficient than the community rating standards mandated by the Affordable Care Act (ACA), for example, because it still allows underwriters to perform a critical function in the pricing of risk while also ensuring that individuals with serious pre-existing conditions can still receive care,” Lawrence said. “Ultimately, rapid cost growth in the health care sector all results from a breakdown in the ability of prices to convey meaningful information as costs are constantly shifted to third parties.”

All things considered, Lawrence said Nevada “cannot bend the cost curve until we make prices meaningful again,” but that doesn’t mean people will have to go without care.

“Governor Lombardo’s plan takes a positive step in that direction,” said Lawrence.

Nevada’s Public Option was passed in 2021 but is not scheduled for implementation until 2026. Lombardo called that “political theater” in his State of the State address in January.

“Getting Nevadans insured is the goal,” the governor said in the address. “At a minimum this law needs to be substantially revised, or better yet repealed, so we can re-focus on the real problem which is getting eligible but uninsured Nevadans the coverage they need.”