Given the extensive evidence of racial and ethnic inequities in the health care system, it is critical to evaluate substantial changes to health care provider pricing through an equity lens. Senators Chris Murphy and Jeff Merkley’s Choose Medicare Act would enable all Americans to choose to enroll in a public insurance option instead of a private insurance plan. The public option would pay providers at prices significantly below those typically paid by private insurers. Urban Institute researchers previously delineated a related “capped rates” reform that would instead limit the prices providers could charge to any private insurer. This analysis examines the implications of the Choose Medicare Act’s public option and the capped rates reform to assess potential effects on racial and ethnic inequities.

WHY THIS MATTERS

Some have raised concerns that reforms like a public option that reduce prices paid to health care providers (particularly doctors and hospitals) could have differential effects across patients in varying race/ethnicity groups. For example, Hispanic people and Black non-Hispanic people have historically been more likely to face barriers to receiving necessary care compared to White non-Hispanic people. To the extent that a public option or capped rates reform disproportionately reduced payments to providers made on behalf of Hispanic people and Black non-Hispanic people, it is possible this would exacerbate past or current wrongs.

WHAT WE FOUND

Consistent with our findings in a previous analysis of the Medicare-X public option (a reform limited to the nongroup and small employer markets), we find no evidence to suggest that a Choose Medicare Act-style public option or a related capped rates reform would reduce access or affordability for Black non-Hispanic, Hispanic, American Indian/ Alaska Native, or multiracial people compared with their White non-Hispanic counterparts. Even in the hospital referral regions where hospital spending reductions would be largest, White non-Hispanic people make up over 60 percent of the population under either reform.

Black non-Hispanic and Hispanic people are underrepresented among the people directly affected by the reforms in the hospital referral regions experiencing the largest reductions in spending.

The capped rates reform would lead to larger reductions in average health care spending for affected households than would the public option because it affects more high-priced employer plans. That reform would also be more consistent than the public option in terms of the average percentage reductions in average health care spending across racial/ethnic groups.

Smaller, indirect effects on people for whom the reforms would not lower provider payment rates were also considered. Black non-Hispanic people in total (those affected plus those not affected by the reforms) are somewhat overrepresented in the largest spending reduction regions. However, the companion analysis to this one, which used hospital-level data, finds no problematic association between the likelihood of an area having large reductions in hospital spending under reform and high concentrations of Black non-Hispanic or Hispanic populations.