Association Between a Capitated, Low-cost, County-Based Public Health Insurance Option and Affordable Care Act Premium Growth in California

Abstract

ImportanceEmpirical evidence is needed on how a capitated, risk-based county plan performs as a viable public option in the Affordable Care Act (ACA) Marketplace in California.ObjectiveTo estimate whether LA Care—a capitated, county-based public option and California’s largest public insurer—was associated with health insurance premium growth in the Los Angeles (LA) regions of Covered California (CC), the ACA exchange in California.Design, Setting, and ParticipantsThis economic evaluation used ACA silver plan premium data within the 19 CC regions. Difference-in-differences and event study models used data on plan-level premiums from Health Insurance Exchange Compare for years 2014 to 2022 to estimate the association between LA Care and ACA premium growth in LA.ExposuresThe intervention was LA Care becoming the lowest-cost health plan on the ACA exchange in 2018. The treatment group included the East and West LA regions, and the control group included the remaining 17 CC regions.Main Outcomes and MeasuresThe main outcome variable was annual premium growth of plans on CC from 2014 to 2022.ResultsUsing 504 plan-level observations for 2014 to 2022, ACA premium growth in LA declined by 4.8% after LA Care became the lowest-cost health plan on the exchange in 2018 (coefficient estimate, −0.048; SE, 0.022; 95% CI, −0.093 to −0.002). Savings due to lower premium growth from 2019 to 2022 were calculated to be $345 million, with approximately 70% of the savings ($242 million) going to the federal government.Conclusions and RelevanceIn this economic evaluation, LA Care was associated with lower premium growth of other health insurance plans in the LA regions of CC, with the majority of savings going to the federal government. California could have captured these savings if it had applied for and received a State Innovation Waiver under section 1332 of the ACA. LA Care may be a viable public option with the potential to be expanded across California through the state’s 16 other county-based health plans.