Iowa proposes plan to stabilize its insurance market

Iowa proposes plan to stabilize its insurance market
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Iowa is asking the federal government to let it alter parts of the Affordable Care Act in an effort to entice insurers into selling plans in the state.  

The state has proposed a “stopgap measure” in the face of the possibility that it may not have insurers willing to sell plans in its individual insurance marketplace. At least one carrier, Wellmark Blue Cross and Blue Shield, has said it would re-enter Iowa’s individual marketplace and offer plans in all of the state’s 99 counties if the measure is approved “in a timely manner.”  

Two carriers, including Wellmark, exited the marketplace earlier this year. The two remaining — one of which only sells plans in about five counties — hadn’t yet committed to selling health plans in Iowa’s insurance marketplace for 2018, a decision affecting 72,000 of the state’s residents. 

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“Given the larger collapse, it is unlikely these carriers will remain meaning there will be ZERO carriers in Iowa’s ACA-compliant individual health care market in 2018, at least in almost all of Iowa’s ninety-nine (99) counties,” the proposal states.

The Iowa Insurance Commissioner, Doug Ommen — who was appointed by a Republican governor — said the state’s “individual health market has collapsed as result of the Affordable Care Act.” 

“The proposed Stopgap Measure is the only proposal ensuring that health insurance will be sold to those utilizing Iowa’s individual market in all of Iowa’s 99 counties in 2018,” Ommen said in a statement. “We are hopeful multiple carriers will participate to offer Iowans choices.” 

The proposed stopgap measure also blamed the uncertainty of federal funding as contributing to marketplace instability. 

The administration and Congress are yet to definitively say how long payments to insurers — totaling about $7 billion — will continue, and some insurers have cited this uncertainty as a reason why they’re exiting the ObamaCare marketplaces. 

Iowa’s move also comes as Republicans are attempting to dismantle ObamaCare, and the Senate is in the midst of attempting to hammer out legislation that can pass its chamber.

If approved, the new measure would let Iowa change the structure of ObamaCare’s tax credits that help consumers afford their healthcare premiums. They would be available based on age and income. Yet the dollars provided are fixed, whereas the existing law's tax credits increase when premiums rise. This would cost about $220 million. 

“The premium subsidies would be rejiggered in ways that help some people and hurt others, but are still quite robust,” Larry Levitt, a Kaiser Family Foundation senior vice president, wrote in an email. 

Yet, he noted that eliminating subsidies helping lower income consumers pay for out-of-pocket costs would “create significant affordability challenges for low-income people,” Levitt wrote. 

Under the proposal, carriers will only sell one standard plan on the state’s individual health insurance market, which compares to an ObamaCare silver plan. 

Additionally, it would set up a reinsurance program to pay insurers for high-cost enrollees. Iowa has gained attention for a teenage patient whose medical claims cost about $1 million per month. 

“This is a notable effort by state officials to address what could be a crisis in their insurance market, fueled in part by uncertainty coming out of Washington,” Levitt wrote in an email. “There would winners and losers here, but it seems like the plan could keep insurers in the market.”

A partnership of the Iowa Insurance Division, Wellmark and Medica designed the plan. Officials from each met with the Centers for Medicare and Medicaid Services last week to discuss the proposal, according to an Iowa Insurance Division press release 

In a statement, a Medica official didn’t commit to staying in the marketplace, saying that the Iowa proposal includes “some important provisions to stabilize the market that we have asked for, particularly a robust state reinsurance program.”

“However, the proposal includes other provisions, including significant changes to the subsidy structure that will have an impact on which consumers do and don’t buy coverage,” Geoff Bartsh, Medica vice president for individual and family business, said. “We are still analyzing those changes to help our decision-making should this proposal be approved.”

The plan has some critics. 

“Basically they’re asking the administration to use 1332 [state innovation waivers] as the carte blanche to allow states to completely re-write the ACA and do whatever they want to do with federal money and that’s not what 1332 is or does,” said Timothy Jost, a Washington and Lee University emeritus professor who has criticized the House-passed ObamaCare repeal bill.