Examining the Benefits of County-Based Public Insurance in California

The introduction of a low-cost, county-based public insurance option was associated with a significant reduction in premium growth for other health insurance plans in the Los Angeles (LA) regions of the California Affordable Care Act (ACA) exchange. Researchers published their findings in JAMA Health Forum. 

Investigators aimed to determine whether LA Care, a capitated, county-based public option, and the largest public insurer in California, was associated with health insurance premium growth in Covered California.

Using difference-in-differences and event study models, the researchers analyzed data from 504 plan-level observations from 2014 to 2022. The intervention occurred in 2018 when LA Care became the lowest-cost health plan on the ACA exchange. The intervention group included the East and West LA regions, while the remaining 17 Covered California regions formed the control group.

LA Care was linked to a significant reduction in ACA premium growth in LA. Specifically, after LA Care became the lowest-cost health plan, premium growth declined by 4.8% (coefficient estimate, -0.048; SE, 0.022; 95% CI, -0.093 to -0.002). 

According to the findings, this reduction resulted in substantial savings, with estimated savings of $345 million from 2019 to 2022. Approximately 70% of these savings, amounting to $242 million, were allocated to the federal government.

Researchers said their study highlights the significance of a county-based public insurance option in controlling premium growth without the need for government mandates or price

regulations. Implementing a county-based public insurance option, such as LA Care, can effectively reduce premium growth in the ACA exchange, the investigators concluded.

Additionally, this study’s implications extend beyond LA Care and can inform the broader policy California, researchers said. California could have captured the savings if it had pursued a State Innovation Waiver under section 1332 of the ACA, researchers said. Furthermore, LA Care may be used as a viable model for a public option that can be expanded across California by leveraging the state's 16 other county-based health plans, according to the investigators.

Reference:
Teotia A, Arnold DR, Scheffler RM. Association Between a Capitated, Low-cost, County-Based Public Health Insurance Option and Affordable Care Act Premium Growth in California. JAMA Health Forum. 2023;4(4):e230488. doi:10.1001/jamahealthforum.2023.0488