Nevada officials are moving forward with plans to adopt a state-managed public health care option despite Gov. Joe Lombardo’s well-documented hostility to the concept.

During Wednesday’s Interim Finance Committee meeting, state lawmakers will receive a status update on the implementation of the public option and progress on a federal waiver, known as a State Innovation Waiver, that states can apply for when “pursu[ing] innovative strategies for providing residents with access to high quality, affordable health insurance while retaining the basic protections of the Affordable Care Act (ACA).”

The waiver must be approved by the U.S. Department of Health and Human Services and the Department of the Treasury. Under Nevada’s public option policy, insurers that bid to provide coverage to the state’s Medicaid population must also bid to offer a public option plan that would resemble existing plans certified through the state’s health insurance exchange but be offered at a lower price. 

A memo from the Department of Health and Human Services obtained by The Nevada Independent ahead of the meeting indicates that the state is recruiting staff to implement the public option, and is on track to submit the federal waiver application by Jan. 1, 2024. The federal government will then have 45 days to determine if Nevada’s application is complete and an additional 180 days to evaluate the application.

Submitting that state innovation waiver is required under the original 2021 state law, and it has to happen, bill sponsor and Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) told The Nevada Independent in an interview ahead of Wednesday's meeting. She said the meeting will provide updates and information on the waiver application following “unnecessary delays.” 

“As much as the governor may want to protest it, the success of this program is success for the state because we're going to get that additional investment [from the federal government],” Cannizzaro said. “Delays in this and trying to slow walk things or not having a successful waiver is only detrimental to the state.”

A spokeswoman for Lombardo declined to comment.

What is a public option?

The public health insurance option aims to leverage the state’s purchasing power with Medicaid managed care organizations — private insurance companies that contract with the state to provide insurance coverage to low-income populations, children, pregnant people and people with disabilities — to get insurers to also offer public option plans. The plans will resemble existing qualified health plans on the state’s health insurance exchange, though they will be required to be offered at a 5 percent markdown with the goal of reducing the plans’ premium costs by 15 percent over four years. 

Plans on the option won’t be offered for sale on the exchange until 2026. Nevada became the second state after Washington to adopt a form of a public health insurance option in 2021, when Democratic Gov. Steve Sisolak signed SB420 into law after it passed on party-line votes out of the 2021 Legislature. 

Various health care industry groups heavily opposed and criticized the bill, including the Nevada State Medical Association, Regional Emergency Medical Services Authority (REMSA), private insurance companies and the Nevada chapter of Americans for Prosperity, the Koch brothers’ political advocacy group.

Opponents of the legislation have argued that by requiring premium reductions, the public option will not reduce costs, but shift those costs elsewhere. They also suggested that Nevada should instead focus on signing up uninsured residents who are already eligible for Medicaid coverage rather than seeking to address the entire uninsured population.

Supporters of the legislation included progressive organizations such as the Progressive Leadership Alliance of Nevada and Battle Born Progress, as well as the Nevada Nurses Association. 

Advocates have argued that the public option will help expand affordable health care coverage to approximately 350,000 Nevadans who are living without insurance.

The public option is designed for people without access to coverage through their employer or family member. An actuarial and economic analysis of the public option projects the public option would make coverage more affordable for more than 50,000 Nevadans by 2026 and nearly double that by 2034. Cannizzaro said the federal waiver is expected to bring in about $500 million over five years from the federal government. 

The option will go into effect as Nevada establishes a statewide Medicaid managed care organization program for all geographic regions in the state. Under a managed care model, the state contracts with health care insurance companies known as managed care organizations (MCOs) that accept a per-member, per-month payment set by the Legislature for health services, regardless of services used. It contrasts with a fee-for-service (FFS) model, through which the state pays Medicaid providers directly for each covered service. 

Cannizzaro said the linkage with the state’s managed care expansion was deliberate.

“It made sense when we're talking about offering a public option to require those insurers who are providing those same MCO contracts for the state to also offer the public option or make a good faith bid for those,” Cannizzaro said. 

Next steps

As Nevada has worked to implement the public option, Colorado also implemented its own version, one that has led to insurers leaving the state, missed price targets and placed financial pressure on the insurance marketplace, among other problems.

But Cannizzaro said Colorado’s public option is structured differently from Nevada and was done on an “accelerated timeline.” She added that the partnerships with the managed care organizations also mitigate the potential for insurers leaving the state.

“We're working with the MCO providers, the people who already have these sort of contracts. They're not leaving the state of Nevada,” Cannizzaro said. “We wanted to make sure that we weren’t putting ourselves into a place where we wouldn’t have places to offer the public option as a plan.”

The public comment period for the waiver in Nevada will open Oct. 16 and end Dec. 6, though the scheduled dates for the meetings are still being finalized. Following federal guidelines, the division will host at least two public comment periods.

“The Division has utilized the appropriated resources from the last biennium to fund an actuarial firm to support the waiver application development,” the state memo reads. “The Division is currently in the process of outlining future resource needs, along with a scope of work, for continued actuarial and policy support through a contracted vendor.”

Delays in the process

The public option implementation has faced hurdles from Lombardo, a Republican who called it “bullshit” on the campaign trail and “political theater” during his State of the State address earlier this year. 

During his address, Lombardo said the public option does not go far enough, lacks “any practical effect,” and “serious questions remain about the rushed implementation of the public option, agency amendments to the statute and lack of transparency.”

He said getting Nevadans insured is a good goal, but the public option law falls short of this and needs to be “substantially revised, or better yet, repealed.” 

In January, officials with Lombardo’s administration postponed a public comment period on the state’s waiver application on the public option, noting that an agenda was scheduled for a public hearing the day after the 400-page actuarial study was published — something Lombardo’s chief of staff called “unacceptable.”

Lombardo also cut funding for the option out of his proposed state budget, removing more than $2 million allocated over the next two years for personnel, operating expenses and information services, among other resources.

However, state lawmakers voted to reverse the cuts and boost funding for the program’s implementation to nearly $5 million over the next two years. 

Cannizzaro said that even with the delays, the law has to be implemented, and the deadline is quickly approaching.

“At the end of the day, that's $500 million in federal dollars, coming back into Nevada to help support our health care system, to help make sure people have access to care,” she said. “We should not walk away from that.”

Updated at 2:06 p.m. on 10/9/2023 with a response from a spokeswoman for Gov. Joe Lombardo.