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States Leverage Federal Funds To Help Insurers Lower Premiums

Washington, DC, United States (KaiserHealth) – When Tracy Deis decided in 2016 to transition from a full-time job to part-time contract work, the loss of her employer’s health insurance was not a major worry because she knew she could get coverage through the marketplace set up by the Affordable Care Act.

But price was a big concern.

“The ACA made it possible to make the switch in my life,” said Deis, 48, who lives in Minneapolis. But she quickly added, “I was really worried about the cost.”

Her anxiety was understandable. In Minnesota, the average cost of insurance in the state-run exchange soared 57 percent in 2017, after a 40 percent rise in 2016.

For Amy Brooks, of Madison, Wis., the initiative is especially timely. Brooks, 48, who pays $150 a month for subsidized coverage in an ACA plan because her job didn’t come with insurance, was diagnosed in April with a benign brain tumor that required surgery.

She lost her job after the diagnosis and said having insurance coverage “takes a gigantic weight off my shoulder. I would have gone bankrupt. … Anything that keeps the costs down is a huge help because I could need this coverage for some time.”

No Panacea

Insurance analysts say that state-based reinsurance programs are a potent mechanism to lower premiums, but not a panacea.

The programs don’t address underlying medical costs, for example. And if money for the programs is not sustained – or increased – over time, reinsurance can yield a one-time decline in premiums over a year or two.

“That initial decrease is meaningful, to be sure,” said Matthew Fiedler, a health policy researcher at the Brookings Institution in Washington, D.C. “But other steps are needed to help stabilize the exchanges.” That could include more money for reinsurance as time goes on, he said.

The every-state-for-itself approach also frustrates insurers and consumer advocates.

“A sustained federal approach would be much preferable and what we’d like to see,” said Kris Haltmeyer, vice president for legislative and regulatory policy at the Blue Cross Blue Shield Association, which represents 36 Blues plans nationwide.

After Republicans in Congress failed to repeal and replace the ACA in 2017, Sens. Patty Murray (D-Wash.) and Lamar Alexander (R-Tenn.) launched a bipartisan effort to stabilize the ACA marketplaces. A prominent part of their plan was a $30 billion reinsurance pool – $10 billion a year.

The effort failed in March amid discord over an unrelated abortion measure in the bill.

– Provided by Kaiser Health News.

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