The Nevada Department of Health and Human Services released a preliminary version of an actuarial study on the state’s new “public option” late last week. The preliminary results indicate that the state could save up to $1 billion in healthcare costs over 10 years following the launch of the state’s new “public option” in 2026.

Why is “public option” in quotation marks? Traditionally, a true public option bypasses private insurers and allows residents to obtain health coverage directly from the government. This sort of proposal is exceptionally dangerous, with potential to destabilize the health insurance market, put small rural hospitals out of business, and more. Nevada’s new “public option,” passed in June 2021, is far from a pure public option: The law institutes standardized private plans with premiums and benefits heavily regulated by the state that will be available to consumers through certain carriers. For the purpose of this article, we will refer to the new reduced cost plans as “public option” plans although NAHU recognizes the Nevada model is not a traditional public option.

The Nevada public option requires premiums to be five percent lower than the benchmark silver ACA plan in each ZIP Code and, ultimately, for premiums to be reduced by 15 percent over a four-year period. Additionally, providers must not go below Medicare rates. How is the state getting carriers to offer the plan? The law compels all MCOs to provide the public-option plan by requiring all companies that submit a bid to be a MCO to also apply to be a public-option plan. Insurers that don’t apply to be a Medicaid MCO could bid to become a public-option plan as well, but it is unclear how many public-option bids the state will approve. Development and implementation of the public option will fall to the director of the Department of Health and Human Services, in consultation with the head of the Silver State Health Insurance Exchange and the commissioner of the Division of Insurance, with the first coverage year slated for 2026. Providers that accept the state’s Medicaid patients or the state employees’ health insurance plan will be required to accept patients on the public-option plan as well.

In addition to establishing the public option beginning in 2026, the bill  required the Battle Born State to release an actuarial study. The preliminary results, conducted by Milliman, appear to show a savings of between $344 million and $464 million in the first five years and $1 billion in savings in the first 10 years. According to the state, savings from the implementation of the public option could be reinvested into advanced premium tax credits (APTCs) for consumers on the state exchange. The state would need to file a 1332 innovation waiver to the federal government to do this, something the Biden administration is likely to approve. The preliminary study also found that up to 55,300 Nevadans are expected to receive “more affordable health coverage” in the first year of implementation.

Governor Steve Sisolak and Senate Majority Leader Nicole Cannizzaro, both Democrats, touted the study’s results in a press conference last week, where the two outlined the process moving forward. With the actuarial study framework created and preliminary results released, the state’s next step is to submit the 1332 waiver, which the state anticipates will occur in March 2023. Before that, however, the Battle Born State will allow for a public comment period where stakeholders, such as the Nevada State Association of Health Underwriters, will be able to submit concerns and suggestions ahead of the waiver submission.