Will multi-State plans lower costs?

Slowing the growth in health care costs is one goal of health reform. Under the Senate bill (scroll to page 2086), at least two multi-State qualified health plans must be available as part of the Exchange in each State. The multi-State plans (one of which must be non-profit) would provide coverage in the individual and small employer markets. The Director of the Office of Personnel Management would enter into contracts with private insurers to offer the multi-State plans. (OPM currently administers the Federal Employee's Health Benefit Program.)

Now, the multi-State idea was adopted as a replacement for the Senate version of the "public option," which would have required the Secretary of Health and Human Services to operate a qualified health plan in the Exchanges of all States that agreed to participate. After much debate, this provision (former Act Sec. 1323) was stripped from the final version of the bill.

So, what impact will the multi-State option have on the cost of health care? Not much, according to the Congressional Budget Office. In a December letter to Majority Leader Harry Reid, the CBO was skeptical that that such nationwide plans would be offered, especially one including only nonprofit insurers. CBO predicted that insurers offering a multi-State plan would probably participate in the State Exchanges anyway. Thus, said CBO, "the inclusion of this provision did not have a significant effect on the estimates of federal costs or enrollment in the exchanges" CBO used when it "scored" the bill.