The federal government has approved a request by the Maine Bureau of Insurance to relaunch its $93 million reinsurance program, which will help reduce premiums for individual insurance on the Affordable Care Act marketplace.
On Monday, the U.S. Centers for Medicare and Medicaid Services granted a waiver that permits the state to diverge from the normal rules set up by the ACA for insurance. The CMS waiver will be effective from 2019 through 2023. Maine previously had operated a reinsurance program, but it was shelved in 2013 after the ACA went into effect.
Reinsurance is a complex program that involves many shifting costs, but the bottom line is it’s a way for the state to pump money into the system, reducing risk for insurance companies in exchange for lower premiums for enrollees. Maine insurers submitted two sets of rates in June for 2019 ACA premiums – one including a revived reinsurance program and one without.
The average rate increase for Harvard Pilgrim is 4.6 percent with reinsurance, but would have been 9.5 percent had reinsurance not been approved. Community Health Options, a Lewiston-based cooperative, requested a 6.9 percent increase with reinsurance compared with a 9.2 percent hike without the program, called the Maine Guaranteed Access Reinsurance Association.
Also, Anthem Blue Cross Blue Shield said in its June filings that it would resume offering coverage on the Maine marketplace in 2019 if the reinsurance program was approved. Anthem had exited the Maine ACA marketplace, and did not offer individual plans for 2018 coverage.
The Maine reinsurance program redistributes insurance money by charging a fee of $4 per person per month on individual and small- and large-group plans, including employer-based insurance not on the ACA marketplace, and then funneling the revenue to individual plans. For 2019, the $4 fee is expected to raise $22.6 million. Reinsurance also will capture $33.4 million in federal money, and the state will collect $37 million in premiums from patients with high-risk health conditions. The $37 million will go into an “invisible high-risk pool,” which will help reduce costs for insurers.
A July 30 letter from CMS administrator Seema Verma concluded that implementation of this reinsurance program would lower individual market premiums in the state.
In a tweet Monday, Verma wrote that the “waiver will provide relief, but underlying causes of the problems (with) Obamacare need to be addressed to create affordability and choice.” Wisconsin’s reinsurance waiver also was approved this week, which Verma lauded.
The Trump administration has largely sought to sabotage the ACA and has advocated for repealing the law.
A Republican effort to repeal the ACA, former President Obama’s signature domestic policy achievement, failed by one vote in July 2017. Maine Sen. Susan Collins was one of three Republicans to buck the party and vote to preserve the ACA.
About 75,000 Mainers have ACA individual insurance, but about 85 percent are shielded from premium increases because they receive subsidies to help lower the cost of premiums. The remaining 15 percent earn too much to qualify for subsidies – the limit is 400 percent of the federal poverty limit, or $83,000 for a family of three.
Those who don’t qualify for subsidies pay the full amount of premium increases, but the reinsurance program helps limit those price spikes.
Eric Cioppa, superintendent of the Maine Bureau of Insurance, declined to comment Tuesday.
Mitchell Stein, a Maine-based independent health policy consultant, said reinsurance is an effective program that does help lower premiums, and it usually avoids partisan fights.
“Reinsurance is the unicorn of health insurance in that both sides (Democrats and Republicans) agree that it’s useful,” Stein said. “It’s an easy way for the administration to do something useful that is less controversial than just about anything else.”
The Maine reinsurance program was originally approved in 2011 but suspended in 2013 because the ACA had a reinsurance program that made the state-based measure moot. However, the federal reinsurance program expired in 2016, paving the way for Maine to restart a state-based effort.
A bill promoted by Collins would have launched a new $30 billion federal reinsurance program, along with other ACA stabilization measures, but those efforts collapsed in Congress this spring.
Joe Lawlor can be contacted at 791-6376 or at:
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