Public option may decrease commercial plan premiums, study finds

Introducing a public health insurance option into markets could lower premiums among commercial payers, according to a study published by the left-leaning Urban Institute, funded by the Robert Wood Johnson Foundation.

Researchers studied how the presence of a Medicaid insurer in a specific region affected premiums offered by commercial plans like Blue Cross Blue Shield, provider-sponsored plans, and other national and local commercial payers.

Researchers found a link between the presence of a Medicaid plan and commercial payers offering lower premiums, according to the report. Specifically, when researchers looked only at the lowest marketplace premium offered by non-Medicaid insurers, they found a 40-year-old consumer in a market with at least one Medicaid insurer could see a $38 reduction in monthly premiums compared to the average for non-Medicaid insurers.

"These managed-care organizations, though not purely public options, represent a proxy for them," the researchers note. Later, they write: "Though we do not suggest our models are sufficiently comprehensive to assess whether the relationship between Medicaid insurer presence and non-Medicaid insurer premiums is causal, our results suggest a causal relationship."

Read the full report here.

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