ACA plan costs to drop on average next year

Reinsurance program is large part of decrease

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.”