ACA plan costs to drop on aver­age next year

Rein­sur­ance pro­gram is large part of de­crease

Milwaukee Journal Sentinel - - Business - Guy Boul­ton and Pa­trick Mar­ley

Pre­mi­ums will drop on aver­age statewide next year for health plans sold on the mar­ket­places set up through the Af­ford­able Care Act.

The de­creases stem largely from Gov. Scott Walker’s pro­gram to help off­set high med­i­cal claims and from health in­sur­ers hav­ing a bet­ter sense of how to price their health plans.

The cost of health in­surance sold to in­di­vid­u­als and fam­i­lies will vary by health plan and through­out the state, with some ar­eas see­ing slight in­creases and some see­ing steep de­creases.

Rates in Brown County, for ex­am­ple, are ex­pected to drop more than 30 per­cent next year.

The drop in pre­mi­ums will help peo­ple who buy health in­surance on their own and who are not el­i­gi­ble for fed­eral sub­si­dies to help off­set the cost.

The cost of health in­surance for peo­ple who re­ceive fed­eral sub­si­dies — those with in­comes be­low $48,500 for one per­son and $100,400 for a fam­ily of four this year — is capped to a per­cent­age of their in­come, and they have been largely shel­tered from the steep price in­creases in re­cent years.

Rates statewide will drop by a weighted aver­age of 4.2 per­cent next year, Walker said in a news re­lease

Thurs­day.

That is an es­ti­mated 10 per­cent lower than they would have been had the state not put in place a pro­gram to help off­set high med­i­cal claims based on the rate fil­ings with the Wis­con­sin Of­fice of the Com­mis­sioner of In­surance and a re­port com­pleted by Wakely, an ac­tu­ar­ial firm.

“It’s a big change for us to say that rates are ac­tu­ally drop­ping year over year,” said J.P. Wieske, deputy com­mis­sioner of in­surance.

The pro­gram, known as rein­sur­ance, ini­ti­ated by Walker and ap­proved by the Leg­is­la­ture and fed­eral gov­ern­ment, is funded by $166 mil­lion from the fed­eral gov­ern­ment and $34 mil­lion from the state. It pays 50 per­cent of the cost of med­i­cal claims be­tween $50,000 and $250,000.

The rein­sur­ance pro­gram ad­dresses one of the key prob­lems with the Af­ford­able Care Act: The health plans have drawn too many peo­ple with high med­i­cal bills and not enough healthy peo­ple to off­set the costs.

Min­nesota, Ore­gon and Alaska also have es­tab­lished rein­sur­ance funds.

The rein­sur­ance pro­gram has helped sta­bi­lize the mar­ket and low­ered rates by 10 per­cent to 12 per­cent com­pared with what they would have been oth­er­wise, said Rob Ple­sha, vice pres­i­dent of ac­tu­ar­ial ser­vices for Quartz Health So­lu­tions, which over­sees Gun­der­sen Health Plan, Physi­cians Plus In­surance and Unity Health In­surance.

Those health plans will lower rates on aver­age by more than 10 per­cent next year, Ple­sha said.

Health plans also have a bet­ter un­der­stand­ing of the mar­ket and what they must charge to break even or make money.

“We’ve caught up to where we need to be in the last cou­ple of years,” Ple­sha said.

Marty Anderson, chief growth of­fi­cer for Se­cu­rity Health Plan, agreed.

“In­sur­ers do have their feet un­der­neath them and un­der­stand the mar­ket bet­ter,” he said.

Anderson es­ti­mated that the rein­sur­ance pro­gram will lower rates by about 10 per­cent com­pared with what they would have been oth­er­wise — though Se­cu­rity Health plans a slight rate in­crease for next year.

The mar­ket for in­surance sold di­rectly to in­di­vid­u­als and fam­i­lies — as op­posed to in­surance ob­tained through an em­ployer or gov­ern­ment pro­grams such as Medi­care — is es­ti­mated at 230,000 peo­ple in Wis­con­sin. Only a small per­cent­age of them — a rough es­ti­mate is 20,000 to 30,000 — don’t re­ceive fed­eral sub­si­dies to help off­set the cost.

The low­est-cost health plans will aver­age $306 statewide next year, down 9.7 per­cent from an aver­age of $337 last year, for a 27-year-old, the Cen­ters for Medi­care and Med­i­caid Ser­vices said Thurs­day.

The cost will be as much as three times higher for peo­ple who are older. It also will vary through­out the state.

The aver­age cost also is based on health plans sold in the “sil­ver” tier on the mar­ket­places.

Most peo­ple who buy health in­surance on their own and who don’t re­ceive fed­eral sub­si­dies buy health plans in the “bronze” tier.

The same holds for peo­ple who re­ceive fed­eral sub­si­dies but do not re­ceive ad­di­tional sub­si­dies avail­able to peo­ple with low in­comes — less than $30,350 for an in­di­vid­ual this year — to off­set de­ductibles and other out-of-pocket ex­penses.

The cost of health plans sold in the sil­ver tier soared last year in large part be­cause of the de­ci­sion by the Trump ad­min­is­tra­tion to not fund those sub­si­dies — even though health in­sur­ers are re­quired by law to pro­vide the ad­di­tional cov­er­age.

Health in­sur­ers through­out the coun­try, in­clud­ing sev­eral in Wis­con­sin, have sued the fed­eral gov­ern­ment over the ad­min­is­tra­tion’s de­ci­sion.

The in­crease in the cost of health plans sold in the bronze tier this year were much lower.

Other fac­tors also came into play.

Rates sky­rock­eted in Brown County last year be­cause Com­mon Ground Health­care Co­op­er­a­tive was the only health in­surer will­ing to sell health plans for in­di­vid­u­als and fam­i­lies on the mar­ket­place.

Com­mon Ground Health­care was new to the mar­ket and did not know what costs it would in­cur. It there­fore was cau­tious in how it priced its health plans in the county.

The health in­surer has planned to lower rates in Brown County next year.

It also will have com­pe­ti­tion: Molina Health­care is re­turn­ing to the mar­ket for health in­surance sold di­rectly to in­di­vid­u­als and fam­i­lies in eastern Wis­con­sin af­ter pulling out the mar­ket sev­eral years ago.

Walker, who is seek­ing a third term, op­poses the Af­ford­able Care Act and is at­tempt­ing to over­turn it through lit­i­ga­tion. At the same time, he’s work­ing within the act’s con­fines to try to bring down costs with his $200 mil­lion plan.

“In Wis­con­sin, in­di­vid­u­als have suf­fered far too long from an un­sus­tain­able health in­surance mar­ket,” Walker said in a state­ment tout­ing his plan.

Walker faces Demo­crat Tony Evers, the state schools su­per­in­ten­dent, in the Nov. 6 election. Evers has crit­i­cized Walker for not do­ing more to ad­dress health care costs and his at­tempt to end the Af­ford­able Care Act.

“Un­til Scott Walker with­draws from the law­suit that will gut health care cov­er­age for 2.4 mil­lion Wis­con­sinites with pre-ex­ist­ing con­di­tions, we know this amounts to noth­ing more than empty, po­lit­i­cal spin from a ca­reer politi­cian who’s wor­ried about his re­elec­tion,” Evers spokes­woman Britt Cud­aback said in a state­ment.

Also Thurs­day, Walker’s re-election cam­paign re­leased an ad fea­tur­ing state Rep. Mary Felzkowski (RIrma), who has over­come two bouts of breast can­cer.

In the ad, Felzkowski says Evers is “ly­ing when he blames Scott Walker for higher health care costs.”

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