For the 2009 Plan Year, 7/08-7/09, the annual average state health insurance premium for the State of NV self-funded public employee’s benefits plan was $8,169.40 (Source: State of NV, PEBP Utilization Report, Sept. 2009). During this benefits period, 16780 active state employees paid from their salary (pre-tax dollars) on average $832.44 ($44.37/month); the State of NV as employer subsidized the balance.
Please note that Nevada collects no corporate or personal income tax and is widely noted for its "pro-business" tax climate. Gaming profits, property, and sales taxes comprise the larger portion of state revenue.
NV’s self-funded insurance is also open to non-state employee participants: their annual cost per employee is $8,592.31 (Source: PEBP, Sept. 2009). Private participants receive far less subsidy from their employers; thus, their monthly annual individual premium cost average is much higher, $716.03.
Calculating the average annual health insurance premium for both groups of State of NV PEBP active (employed) participants yields $8218.56.
The annual national average cost for "employer-based health care costs" in the US, according to the Business Roundtable’s recent Health Care Reform report, is $10,743.
I started this calculation because I wanted to prove that public options save money: In Nevada, compared to the current US average they do. State of NV PEBP participants pay 76.5% of the national average. If it is possible to extrapolate national savings for a self-insured, single-payer public option, we could expect to reduce health insurance premium costs for employed participants by 23.5%. Lest you believe, dear reader, that plan participants receive "junk insurance" for such a reduced cost, let me introduce you to the private individual participants in the PEBP insurance plan.
These "non-State participants" are people who buy into Nevada’s state-employee self-insurance plan. In other words, the public employees’ health benefits plan is sold as if it were private insurance to individuals seeking coverage in Nevada’s state market for health insurance plans. In the 2009 Plan Year, 697 such individuals made a free-market decision to purchase State of Nevada PEBP insurance because, despite its cost, it was a better value than other private, for profit plans available in this state. These 697 people represent 4% of the total participant pool. What can we extrapolate from this?
With hundreds of thousands of employed persons in Nevada, the State of Nevada PEPB health insurance plan represents no threat to the private health insurance market. Further research will show who these "non-state participants" are and how the PEPB plan’s rules are written, if they are, to control who may and may not buy into the plan (presumably, from a private employer). If such rules exist, we may infer that rules for a nationwide self-insured, single-payer public option could be written to restrict plan access so that a private, for-profit insurance market remains viable.
The real take-away from this exercise, IMHO, is that large-pool, self-insured, single-payer insurance dramatically cuts premium costs. The State of NV PEBP plan averaged 17,477 active (employed) participants for the 2009 Plan Year. This figure represents and exerts strong bargaining power to reduce health care costs in the form of plan payments to health care service provider participants; the public option thus produces heavy downward pressure on the cost of medical fees for service, too. The "actual" health care service costs and plan discounts reported by provider participants may make the situation look as if providers are barely scraping by, but the fact of the matter is that these statements of so-called actual costs are inflated to provide bargaining chips in future negotiations with the plan. Clearly, if the plan’s payments to providers were not economically viable for them, then providers would refuse to continue with the plan. The fact that our preferred provider list remains robust, offering the choice of thousands of primary care doctors and specialists and a wide array of lab, testing, hospital, and other medical support services, shows the viability of NV’s public option and implies the feasibility of a similarly constructed national public option.
Does comparable information from other states lend support to this argument?