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By Sara Hansard
States are moving along with plans to set up their own programs to reduce premiums in the 2019 Obamacare markets after the collapse of a federal market stabilization plan.
Wisconsin, Maryland, and Hawaii are the furthest along with plans to set up reinsurance programs that provide health insurers with funding to cover high-cost claims, and the District of Columbia, Rhode Island, and Vermont are considering proposals to create their own individual mandates, health-care experts told Bloomberg Law.
Without measures to stabilize the individual markets in 2019, premiums could once again rise sharply after double-digit increases in 2017 and 2018, and people on both sides of the political aisle are warning the markets could collapse. But time is running out as many state legislatures are about to end for the year.
A market stabilization plan put forward by Republicans was dropped from the fiscal 2018 omnibus spending bill enacted March 23 because Democrats objected to a provision in the plan that would have blocked billions of dollars in cost-sharing payments and reinsurance funds from being used to support any health plans that cover abortions.
The Maryland House of Delegates and the state Senate have approved legislation that would create a reinsurance program for 2019, and Gov. Larry Hogan (R) is expected to sign it, Maryland Sen. Thomas Middleton (D), chairman of the state Senate Finance Committee and primary sponsor of the Senate bill, told Bloomberg Law March 26.
Between $300 million and $400 million would be provided for payments to health insurers to cover high-cost claims under the legislation, Maryland Insurance Commissioner Al Redmer told Bloomberg Law March 26. That would reduce premiums by about 20 percent, he said. That in turn would reduce the amount the federal government must pay under the Affordable Care Act to cover premium tax credits for exchange enrollees with incomes between 100 percent and 400 percent of the federal poverty level.
Without the legislation, Maryland would potentially face premium increases of as much as 50 percent in 2019, said Redmer, a Republican appointed by Hogan. Such increases could be “the catalyst for the market to implode,” he said.
Moreover, that could have “catastrophic results for the group market and even self-funded plans,” Redmer said. Under Maryland’s all-payer system, the state negotiates rates hospitals can charge to health insurers. A spike in premiums could lead to an increase in the number of uninsured people and an increase in uncompensated care costs for hospitals, he said.
Under the Maryland bill, health insurers such as Kaiser Permanente and CareFirst would have to pay fees of 2.75 percent of premiums to help fund the reinsurance plan. The health insurance providers fee, which helps fund the ACA, was suspended for 2019 under federal tax legislation, and the state tax would increase previous fees paid by Kaiser Permanente, a health maintenance organization, Middleton said.
The state will study the issue of insurer fees for future years, Middleton said. “We are at the eleventh hour right now,” he said. “We need to get a bill through.”
Wisconsin is the furthest along in creating a reinsurance plan, Justin Giovannelli, associate research professor at Georgetown University, told Bloomberg Law March 26.
Wisconsin has enacted legislation allowing the state to apply for a waiver under Section 1332 of the ACA, which allows for changes that are at least as comprehensive and affordable and provide coverage to a comparable number of residents without increasing the federal deficit. The state is holding hearings and taking comments on its draft waiver application for 2019, which it intends to submit shortly, Wisconsin insurance office spokeswoman Elizabeth Hizmi told Bloomberg Law March 27.
The $200 million reinsurance program would reduce 2019 premiums by a projected 10 percent, Hizmi said. The average rate increase in Wisconsin’s individual market was 42 percent for 2018, she said.
Wisconsin, Maryland, and Hawaii—where a reinsurance bill is being considered—are the states where plans for 2019 are “most likely to go somewhere,” Giovannelli said.
In other states, bills have been introduced and discussions have taken place about reinsurance plans, but “realistically, it’s going to be a relatively small number that move forward” for 2019, he said.
Louisiana and Indiana are considering reinsurance legislation, and there is interest in a plan in Washington state, Giovannelli said. But it is difficult for states to come up with funding for the plans, he said.
Alaska and Minnesota already put reinsurance plans into effect, and Oregon has received federal approval to put a plan in effect for 2019, Trish Riley, executive director of the National Academy for State Health Policy, told Bloomberg Law March 27. The NASHP is a group of state health policymakers headquartered in Portland, Maine.
Legislation is also pending in the District of Columbia, Rhode Island, and Vermont to create individual mandates requiring people to be covered by qualified health insurance, Riley said. The penalty for not having qualified coverage will be eliminated in 2019 under the federal Tax Cuts and Jobs Act, and health insurers have said some incentive is needed to keep people in the individual markets so that healthy people don’t flee.
For many states, “the legislatures are closing fast” to take action for the 2019 insurance markets, Riley said.
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