With Congress not likely to provide funding to help stabilize the Obamacare markets, some states are moving along with plans to set up their own programs to reduce premiums for 2019 but time is running short.
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. The District of Columbia, Rhode Island, and Vermont are considering proposals to create their own individual mandates after Congress eliminated tax penalties for not having qualified coverage.
Wisconsin is the furthest along in creating a reinsurance plan. The state has enacted legislation allowing it to apply for a waiver of the Affordable Care Act to set up a $200 million reinsurance program. The program would reduce 2019 premiums by a projected 10 percent, a spokeswoman for the state’s insurance regulator told me. The average rate increase in Wisconsin's individual market was 42 percent for 2018, she said.
Maryland Gov. Larry Hogan (R) is expected to sign legislation allowing it to also apply for federal permission to create a reinsurance program, Maryland Sen. Thomas Middleton (D), chairman of the state Senate Finance Committee and primary sponsor of the Senate bill, told me.
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 me. That would reduce premiums by about 20 percent, which in turn would reduce the amount the federal government must pay under the ACA 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, Redmer said. Such increases could be “the catalyst for the market to implode,” he said.
Bills have been introduced and discussions have taken place in other states about reinsurance plans, but “realistically, it's going to be a relatively small number that move forward” for 2019, Justin Giovannelli, associate research professor at Georgetown University, told me.
In addition to having to come up with some funding of their own, which is always difficult for states, many state legislatures have closed are will close soon, he said.
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