State pulls bid to repurpose federal funds
The state of Oklahoma has withdrawn its application for permission to repurpose federal funds to try to lower health insurance premiums in the individual market.
The Oklahoma State Health Department had asked the Centers for Medicare and Medicaid Services for a “waiver” to use $350 million in federal funds for a reinsurance program. The reinsurance fund would act as a backstop by paying a certain percentage of insurers’ bills for expensive patients. In theory, this would allow insurers to lower premiums by about 30 percent, benefiting customers and possibly drawing younger and healthier people to the market.
The reinsurance plan would have had the most benefits for people who earn too much to receive subsidies when they buy health insurance through the exchange. The credits rise as premiums do, effectively shielding households that qualify from the higher costs. People who earn less than 138 percent of the federal poverty line also don’t receive subsidies, but were unlikely to be able to afford premiums even if they fell by 30 percent.
A letter from Commissioner of Health Terry Cline, which the Health Department posted online Friday, announced the state was pulling the plug on its request, however.
Cline’s letter to outgoing U.S. Department of Health and Human Services Secretary Tom Price and Treasury Secretary Steve Mnuchin said the state had been promised its waiver would go through by Monday. A quick turnaround was vital because Blue Cross Blue Shield, the only insurer offering plans on the exchange in Oklahoma, needs to file its rates for next year by the end of September, the letter said.
Cline said that as late as Sept. 22, Price and Mnuchin’s departments still agreed to approve the request by Monday.
“When your departments communicated on Monday that waiver approval would not be provided, with no reason for the delay or timeframe for approval, the Oklahoma reinsurance program was effectively inoperative for the 2018 plan year,” he said.
Health Department spokesman Tony Sellars said the state was “disappointed,” but would meet with stakeholders to explore options for 2019.
Such a swift approval would have been an anomaly. Alaska made a similar application, which took six months to approve, and Minnesota’s application took about four months, according to documents posted on the Centers for Medicare & Medicaid Services website.
A letter posted on the website showed it had received Oklahoma’s application Aug. 16. The public comment period was scheduled to run through Sept. 23, meaning the Centers for Medicare & Medicaid Services would effectively have had to decide to approve the waiver before reading all public concerns or suggestions.
Typically, the Centers for Medicare & Medicaid Services examines public comments and determines whether any of them raise issues that the state should address in a revised application, which would have been almost impossible if the state was promised an approval by Monday.
Some raised concerns that Oklahoma’s situation could create uncertainty for other states pursuing reinsurance waivers. Joel Ario, managing director at Manatt Health, said Oklahoma’s request used “boilerplate” language along the lines of Alaska’s and Minnesota’s requests, and state officials were told approval was imminent.
“When you have this kind of boilerplate and you have an approval package (prepared), that does raise questions,” he said.
Oregon also is pursuing a waiver, Ario said. Its waiver may show whether the Centers for Medicare & Medicaid Services is changing its approach to the waivers, he said.
“That will be interesting to see if that’s granted or if it’s pulled back,” he said.
Some raised concerns that Oklahoma’s situation could create uncertainty for other states pursuing reinsurance waivers. Joel Ario, managing director at Manatt Health, said Oklahoma’s request used “boilerplate” language along the lines of Alaska’s and Minnesota’s requests, and state officials were told approval was imminent.