Washington State Passes a Public Option, But Insurance Companies Will Still Get Their Cut

Washington state will become the first in the U.S. to offer a public option for health insurance to all its residents, according to ABC. The option, known as Cascade Care, will include tiered plans that will cover standard health services and are expected to cost up to 10 percent less than private insurance. The plans will be available to all Washington residents regardless of income.

The Washington legislature passed the plan in April, and Gov. Jay Inslee, who is running for president in 2020, is expected to sign it on Monday. Similar public options have been proposed in eight states, including Colorado and New Mexico, but Washington is the first to successfully pass a bill.

The model that will be put in place in Washington is one that’s supported by some of the centrist candidates running for office in 2020. It doesn’t cut out private insurance companies, but instead incorporates them into the public plan. This avoids a fight with a powerful lobbying group, but doesn’t do as much to lower costs as the national Medicare for All plan sponsored by Sen. Bernie Sanders would.

Cascade Care plans to lower costs by instituting caps on the amount of money the state will pay doctors, hospitals, and other providers. The initial cap on rates set by Washington is high, at 160 percent of federal Medicare rates. Legislators set this cap in order to attract providers to the new plans. But with rates that high, it’s unclear whether the savings will be enough to make a real difference to patients.

Another concern is that patients in Washington’s rural areas already struggle to find doctors who will accept their insurance. Even with the high caps, this new plan could make that even harder.

With their new plan, Washington will avoid the obvious way of saving money on healthcare: cutting out insurance companies. Instead, Cascade Care lets insurance companies remain central to healthcare by hiring them to administer the plan.

“It’s an attempt to keep the insurance companies in the game,” Aaron Katz, a professor of health policy at University of Washington, told ABC.

This model inadvertently demonstrates a weakness in the hybrid health care proposals advocated by some centrist Democrats—once you cut insurance companies in, it becomes extremely difficult to cut them out.

“The size of the business that we are giving to private insurers makes it ever more difficult to ever extract ourselves from those dependencies,” Katz told ABC.

Even the bill’s sponsor, state Sen. David Frockt, calls the plan a compromise.

“What’s important about this plan is that the government is coming in and taking a more aggressive role in regulating the cost drivers of health care,” Frockt told ABC.