By Colleen Becker and Dick Cauchi
What can states do to ready themselves for federal changes to health insurance markets because of laws, regulations and executive orders? Will the cost of health insurance premiums level off? Where can states innovate to help consumers?
At NCSL’s 2018 Legislative Summit, some of the nation’s leading experts answered such questions for lawmakers and other attendees during the session “Latest Ideas for Fixing Health Insurance Markets.” NCSL asked a panel of esteemed health policy professionals to share their insights and opinions on the latest trends and developments in the health insurance market and about the stability of the state exchanges or marketplaces.
How drastically will states see insurance rates go up on the individual and small group market in 2019? “Overall, rate increases are better than last year,” said Brian Webb, assistant director for health policy and legislation at the National Association of Insurance Commissioners (NAIC).
He added that the availability of plans has also improved. In many states, for people who receive subsidies and purchase plans on the individual market, the change in rates will be absorbed by the subsidies, with a minimal effect on those individuals. Unfortunately, for those who purchase plans without subsidies, they will sustain the full impact of these increases, which prices many consumers out of the market.
Webb highlighted two main challenges faced by state insurance marketplaces:
- The revocation of the individual mandate penalty, without which people who remain in unsubsidized plans have little incentive to retain such expensive insurance coverage.
- People who can’t afford the unsubsidized premiums need help to access more affordable coverage.
With no immediate solution to these issues, people in this demographic may well leave the individual marketplaces in search for alternative coverage options or join the ranks of the uninsured.
The Trump administration has proposed alternative coverage options to slow or reverse the rising cost of health insurance premiums. During his NCSL Summit remarks, Health and Human Services (HHS) Region VIII Director Dr. Brian Shiozawa outlined HHS Secretary Alex Azar’s four priorities, one of which is to look at health insurance plan reforms. One change the federal government has just implemented allows small businesses and self-employed individuals with similar business interests to band together and form association health plans (AHP).
Under a new federal rule, AHPs are not subject to the same coverage requirements as plans sold on the exchanges, such as offering benefits like maternity care or prescription drug coverage.
Coincidentally, Shiozawa relayed breaking news from HHS issuing a final rule allowing short-term limited-duration (STLD) health plans to be renewed annually up to three times, for a total of up to 36 months. Under the Obama administration, such plans could be renewed only every three months, for a total of 12 months. Like association health plans, STLDs are not subject to the same comprehensive requirements as those on the exchanges.
Critics of association health plans and short-term limited-duration health plans assert that, since they are not regulated in the same way as plans on the individual marketplace, they are susceptible to insolvency and fraud, leaving consumers “holding the bag” with exorbitant out-of-pocket costs. Critics also argue that such plans split the larger insurance risk pool, siphoning off healthier, younger enrollees out of the marketplaces while leaving behind a sicker and older population.
Justin Giovanelli, associate professor at the Georgetown Center for Health Insurance Reform, said one way states are mitigating the rising cost of premiums is by implementing a reinsurance program via a 1332 innovation waiver.
Reinsurance programs are essentially a reimbursement system that protects insurers from costly claims. It usually involves a third party paying part of an insurance company’s claims once they pass a certain amount.
Built into the Affordable Care Act (ACA), 1332 waivers allow states to explore ways to modify key parts of the health law while still fulfilling the original aims of the ACA. Seven states have initiated some sort of reinsurance program with Alaska and Minnesota pioneering the idea. Both states’ reinsurance programs have generated significant savings which translated to lower rate increases than projected prior to program implementation.
To sum up, premiums are not expected to increase as dramatically in 2019 as in past years, but the financial pain will still be felt. With several federal policy changes still awaiting implementation, a great deal of uncertainty remains.
What is clear: Many Americans are still having difficulty obtaining affordable, comprehensive coverage. What the health insurance landscape will look like after open enrollment begins Nov. 1 is anyone’s guess, but what panelists did agree on is that states continue to play an instrumental role in regulating plans within their boundaries. That is the one thing state policymakers can count on.
Hear the presenters and view their slides. Download key speaker resources. NCSL’s project on Health Systems is made possible in part by a grant from The Commonwealth Fund.
Colleen Becker and Richard Cauchi cover health insurance for NCSL’s Health Program in Denver.