A Progress Report on Washington’s Public Option Plans

By Christine Monahan and Madeline O’Brien

The 2023 open enrollment season marked the third year of Washington State’s public option-style plan, “Cascade Select.” In its initial year, cost and access challenges hindered the state’s goals of driving down costs and improving Affordable Care Act (ACA) marketplace competition. A recent report by the Washington Health Care Authority suggests these issues have remained principle concerns for state officials charged with implementing the public option program. This blog provides an update on how Cascade Select plans performed in the recently concluded open enrollment period, and outlines key issues to watch as Washington moves forward with its first-in-the-nation program.

2023 Open Enrollment Update

Cascade Select plans are publicly procured products run by private insurers, with state-imposed limits on provider reimbursement. Washington selected three insurers to offer Cascade Select plans in 2023, down from five insurers selected in previous years. In selecting these three insurers out of seven bidders, Washington balanced expanding Cascade Select plans to additional counties with increasing plan affordability, while minimizing the number of new plans in already competitive counties to reduce choice overload. On all fronts, Washington’s public option program showed progress in 2023.

Cascade Select plans were available in 34 out of 39 counties, up from 19 in 2021, giving 98 percent of current exchange customers access to a public option plan. Cascade Select plans also generally saw lower rate increases relative to other plans, and were the lowest cost silver plans in 25 counties.

Further, enrollment growth in Washington’s public option plans accelerated in 2023. According to preliminary data, Cascade Select plan enrollment has more than tripled since 2022—approximately 27,000 individuals enrolling in a the plans during 2023 open enrollment, including 10,000 new customers and 17,000 customers who re-enrolled. These totals represent more than 11 percent of total marketplace enrollees and 27 percent of new enrollees  Graphics suggest few enrollees moved out of Cascade Select plans between 2022 and 2023.

Key Issues to Watch

For the future, Washington policymakers are evaluating the public option’s performance and considering modifications to further advance state goals.

Increasing Affordability

Currently, Washington’s primary hook for increasing affordability through its public option program is capping the aggregate reimbursement rates Cascade Select plans pay providers at 160 percent of Medicare rates. While the plans often have lower premiums than other products sold on Washington’s marketplace, significant premium reductions have yet to materialize, even when Cascade Select plans hit the reimbursement target. Despite data showing that three insurers came in below the 160 percent target in 2021, only one insurer achieved meaningfully lower premiums for its Cascade Select plans in 2023. The Health Care Authority is working with its sister agencies, the Washington Health Benefit Exchange and the Office of the Insurance Commissioner, to explore ways to further reduce premiums. Options the state may explore include lowering its reimbursement cap, adopting a disaggregated cap to better target high price services, providers, or regions, and setting premium reduction targets similar to Colorado and Nevada’s public option-style plans. The Health Care Authority is also examining how conflicting timelines and responsibilities regulating plans among it and its sister agencies may be limiting the Authority’s negotiating power over insurers bidding to offer Cascade Select plans. For example, in 2023, the Authority was negotiating its contracts while plan rates were under review by the insurance department.

Requiring Insurer Participation

Under the statute establishing Washington’s public option program, the Health Care Authority is exploring whether it may be beneficial to require insurers participating in public employee benefit pools or other Health Care Authority programs, such as Medicaid, to bid for Cascade Select contracts, without requiring the Authority to accept these bids. This would be similar to the process established in Nevada, where Medicaid managed care organizations will have to submit bids to offer public option plans beginning in 2026.

While such a requirement could increase choice, the Health Care Authority has cautioned that additional insurers in areas with sufficient marketplace competition may not enhance the access and affordability goals of the public option program. For example, Regence Blue Shield offered public employee benefit pool coverage in 2021 and 2022, but the Health Care Authority rejected the bid from Regence-affiliated BridgeSpan to offer a Cascade Select plan in 2023 based on restricted service areas and high rate proposals. Similarly, two out of five Medicaid insurers in Washington already offer the public option plans, while another two were rejected in 2023 and the final insurer does not currently participate in the individual market. Additionally, complications related to network continuity and different procurement processes could create obstacles for insurers attempting to bid across programs.

Improving Provider Participation

Cascade Select networks, while complying with state network adequacy requirements, are relatively narrow compared to other marketplace health plans in Washington. The Health Care Authority suggests this may be partially due to the plans’ lower reimbursements: several insurers bidding to offer Cascade Select plans in 2023 reported that providers declined to join their networks due to the aggregate reimbursement cap. While Washington currently requires certain hospitals to contract with at least one Cascade Select insurer, this requirement does not extend to non-hospital providers or assure that hospitals will contract with multiple insurers offering public option plans. Anecdotally, insurers have suggested that many providers—particularly those in large health systems—were willing to contract with just one Cascade Select insurer to satisfy their statutory obligation, turning down opportunities to contract with other public option insurers.

The Health Care Authority suggests that requiring all providers who opt into public benefit pool plans to also participate in Cascade Select could help to expand public option plan networks and improve consumers’ plan choice. However, the state agency also acknowledges that expanding plan networks must be balanced against affordability goals. They also describe a commitment to working with the Office of Insurance Commissioner to further analyze provider network information as the program continues.

Looking Ahead

Washington has made meaningful progress in implementing its public option program, and continues to strive for improvements to premium affordability and access. As more states consider and launch their own public option programs, lessons learned from Washington’s initial challenges and recent successes may help guide their efforts.