Nevada’s public option is another legislative mistake

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This opinion column was submitted by RGJ columnist Sam Kumar, former Chairman of the Washoe County Republican Party.

In the recently concluded 2021 legislative session, the Nevada State Legislature adopted the state-run “public option” in health care, making it the second-largest state of the country to adopt such a law. The public option plan will be available for purchase to eligible participants starting in 2026.

For starters, if you are wondering what the public option is and where does it fit in with the other myriad of government “solutions” like Medicare, Medicaid, and Obamacare, you are not alone. For the purposes of this column, our main focus is the public option. Nevada’s version of the public option will force health insurers who participate in the state’s Medicaid program to submit an offer for the public option plan. In addition, the premium for the public option plan must be 5% lower than similar plans sold on the Obamacare exchange (the law requires the premium to be 15% lower than similar plans in four years). In addition, health care providers who accept Medicare patients or the state employee’s health insurance plan will be required to accept patients from the public options plan.

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Put aside the fact that I have serious problems with the government “requiring” private entities and individuals to do something. Government involvement in setting premiums and reimbursement rates is a slippery slope. Take Medicare, for example. Medicare reimbursement rate is around 80 percent of the amount that private companies pay. Providers often lose money serving Medicare patients, but they make up for it by charging private companies a higher rate. With the public option plan, as the government forces premiums down, providers will end up losing money on public options patients. This will lead providers to opt out of the public option, making them ineligible to treat Medicare patients. Ultimately, this will have an impact on the long-term viability of both programs.

The public option is a government program, and every government program begins with a seemingly noble claim. Proponents of the public option claim it will expand coverage while reducing costs.

Show me a government program that cuts costs in a sustainable way. We have seen this movie before. There will be temporary cost reductions at the start. Over time, the bureaucracy will increase, and so will the costs. Next are government subsidies, so that the demand for lower premium reductions can be preserved. We can all see the explanation: Adverse selection resulted in the government plan covering the sickest patients, making it costly. Wait times will increase as suppliers move out. Ultimately, the public option will expand until it can no longer be sustained.

To understand how government programs start and grow, we don’t have to look any further than social security. When the program began in 1940, it represented 0.29% of total federal spending. In 2000, in just 60 years, it became the largest annual federal expense, increasing nearly one hundred times to 22.88% of federal spending, according to the Social Security Administration.

One final point: government is the most inefficient sector of the economy. It is run by bureaucrats who report to politicians. Politicians worship special interest groups and lobbyists on the altar. Most government programs are influenced by special interest groups and riddled with government waste. Take the example of the homeless camp in San Francisco. The camp costs the city of San Francisco $ 60,000 per tent, per year, according to the San Francisco Chronicle. That’s twice the median cost of a one-bedroom apartment in this city. This is the only type of “savings” the government is capable of achieving, and the public option in Nevada will follow a similar path.

RGJ columnist Sam Kumar is a former President of the Washoe County Republican Party.

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