The Maine Bureau of Insurance is considering launching a program that could help stabilize the Affordable Care Act’s individual marketplace and potentially lower premiums or keep rate increases in check.
The idea follows the demise of three federal programs that were designed to stabilize ACA insurance markets, but were defunded by Congress or allowed to sunset by the end of 2016. The ACA individual marketplace is where people can buy subsidized health insurance.
Eric Cioppa, Maine’s insurance superintendent, said the bureau is supporting a bill that would allow the bureau to request a waiver from the U.S. Centers for Medicare and Medicaid Services that would permit states to create re-insurance programs, which help insurance markets by providing a safety net against excessive claims. They typically reduce financial risk for insurance companies and, in some cases, infuse new money into the health insurance system.
“It’s a way to reduce rates,” Cioppa said. “I would think we would want to take advantage of a program that would lower premiums.”
Experts say the end of the three federal market stabilization programs was part of the reason for large premium increases in 2017 on the ACA individual market, including double-digit increases for Mainers who did not qualify for subsidies.
Kevin Lewis, president and CEO of Community Health Options, a cooperative that sells insurance on the individual marketplace, said the re-insurance proposal “has a lot of promise.”
On March 13, U.S. Health and Human Services Secretary Tom Price sent a letter to all governors inviting them to participate in the waiver program to create re-insurance systems, noting the success of Alaska, which has started its own re-insurance program.
“To receive approval, the state must demonstrate that a proposed waiver will provide access to quality health care that is at least as comprehensive and affordable as would be provided without the waiver, will provide coverage to at least a comparable number of residents of the state as would be provided coverage without a waiver, and will not increase the federal deficit,” Price wrote.
Price said that states could capture federal money for the programs, although it wasn’t specified how much money would be available.
PREPARATIONS AMID UNCERTAINTY
The potential marketplace boost comes at a time of uncertainty for the ACA. While an ACA replacement plan advanced by U.S. House Republicans fell apart in late March, another plan is being considered that could eliminate the mandate that insurance companies accept enrollees with pre-existing conditions.
But that plan is significantly to the political right of the failed plan touted by House Speaker Paul Ryan and President Trump, which was lambasted by Democrats and some moderate Republicans in the House and Senate, including Sen. Susan Collins of Maine, a key Republican moderate.
Cioppa told the Press Herald that there’s no telling what the federal government will do, but it makes sense to be prepared to shore up the ACA to benefit Maine residents. About 80,000 Mainers have ACA insurance.
Cioppa said the program could go into effect by 2019 if L.D. 659, which is before the Insurance and Financial Services Committee, were to pass and the re-insurance waiver for Maine were approved by the federal government this year. Many actuarial studies would have to be completed and the logistics worked out before it could be launched. He said hopefully by then, it will be known whether the federal government is going to scrap or keep the ACA and whether there will be funding for state-run re-insurance programs.
“There’s a lot of work still to be done,” Cioppa said.
OLDER PROGRAM ISN’T COMPARABLE
Maine had a re-insurance program that predated the ACA, the Maine Guaranteed Access Reinsurance Association, or MGARA. While only in operation for 18 months before being supplanted by the ACA, the program held down rates, Cioppa said. Anthem plans had premium increases of 1.7 percent in 2012, when there would have been a 20 percent increase had the re-insurance program not been in place, he said. At the time, most people with individual insurance had Anthem plans.
But Mitchell Stein, an independent health policy analyst based in Cumberland, said it’s not a fair comparison because MGARA plans had much skimpier benefits than what was previously required under Maine law, as well as higher deductibles, co-pays and prescription costs. For instance, the MGARA plans did not cover maternity benefits, he said.
Stein said MGARA assessed a $4 per person, per month fee on individual, small and large group plans, but the program only provided assistance to individual plans. So for the other plans, they were paying into a system that did not benefit them.
But Stein said re-insurance programs could work depending on how they are structured and funded, with federal or state dollars or a combination. Alaska’s re-insurance program for this year was funded with state money.
“You can create a great program on paper, but if the money isn’t there, it doesn’t end up doing much,” Stein said.
Lewis, the Community Health Options CEO, said re-insurance and other proposals by the Trump administration have some potential, such as more flexibility in what types of plans are offered. Lewis said for young, healthy people, being able to purchase a plan with a lower premium but with a slightly higher deductible and co-pays than what is currently permitted under the ACA could encourage them to enter the marketplace. That would help keep premiums lower because young, healthy people cost the least for insurers to cover.
Similarly, keeping premiums from skyrocketing will help bring more people not eligible for subsidies – households earning $97,000 for a family of four, for instance – to stay in or enter the individual market. Those who do not receive subsidies have to pay the full premium increase, while those who qualify for subsidies are mostly protected from premium increases.
“These are all tools that can foster a healthy marketplace,” Lewis said.
Joe Lawlor can be reached at 791-6376 or at:
jlawlor@pressherald.com
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