States would have the flexibility and funding to develop their own health insurance plans for low-income individuals under a provision approved and attached to a sweeping health reform package. The measure authored by Sen. Maria Cantwell (D-Wash.) allows states to use federal dollars to create what would amount to public plans for people with incomes of 133% to 200% of the federal poverty level, which is currently $22,050 for a family of four.
Under the provision passed by the Senate Finance Committee on a 12-11 vote, state governments could use their share of federal dollars to negotiate with insurers for high-quality, low-cost coverage options. Those who meet the eligibility requirements would have several pre-negotiated options through a basic health plan rather than being limited to independent negotiating through a proposed insurance exchange. The amendment would let states negotiate with insurers and give managed-care organizations the authority to administer the benefits.
“This hits the sweet spot of interest,” Cantwell said. “It's a public plan, but negotiated with the private sector.” A similar model has been in use in Washington for more than two decades, Cantwell said. There, the program pays providers well above Medicaid rates for primary and specialty care, as well as for hospitalizations.