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CMS Approves Wisconsin State Reinsurance Program

CMS has approved a four-year state reinsurance program in Wisconsin that is expected to lower individual insurance premiums for consumers.

CMS approved a four-year reinsurance program in Wisconsin that will lower consumer premiums.

Source: Thinkstock

By Thomas Beaton

- CMS has approved Wisconsin’s plan to launch a state reinsurance program from 2019 to 2023 to help reduce individual state premiums and control the growth of state healthcare spending.

The program, called the Wisconsin Healthcare Stability Plan (WIHSP), is expected to lower individual premium rates by 3.5 percent in 2019, according to Governor Scott Walker. Without WIHSP, premiums would be likely to rise significantly in the upcoming plan year.

“People in the individual market saw their premiums go up by 44 percent on average last year, and some saw much larger increases – that’s unsustainable and unacceptable,” Walker said in a press release.

“Thankfully, the federal government is giving us the flexibility to implement a Wisconsin-based solution to help stabilize premiums. Our healthcare stability plan is simple and it lowers costs. Thanks to the Wisconsin Legislature for all of its work and support on this monumental reform.”

State officials submitted a 1332 waiver in April 2018 that requested $200 million in financial assistance to help Wisconsin payers cover their most expensive claims. Wisconsin will pay roughly $36 million in reinsurance costs while CMS will cover the remaining $166 million in 2019, according to an actuarial analysis.

Instead of using federal premium tax credits to cover individual premium subsidies, the reinsurance program pools the money into a single fund. Payers with individual claims between $50,000 and $250,000 will receive cost assistance of 50 percent to offset high-dollar expenses.

State insurance officials will be required to adhere to strict reporting and administrative requirements in order to receive reinsurance funds.

Wisconsin is required to report any changes in state law that would affect reinsurance reimbursement to payers. The state must also inform CMS of overpayments or improper reinsurance payments made through WIHSP.

WIHSP administrators are also required to submit quarterly and annual reports to CMS about the program’s performance.

Quarterly reports need to contain data that shows compliance with the ACA’s consumer protections, WIHSP progress, and additional information to support the approval of pass-through funding. The annual reports require information on WIHSP performance, spending, available state revenues, duplicative or improper payments, and incentives to payers, enrollees, or providers.

Wisconsin is now the fourth state to implement a reinsurance program.

Alaska, Minnesota, and Maryland are expecting millions in reinsurance funds that could reduce the cost of individual premiums by 20 percent.

Wisconsin officials believe that more states will opt for reinsurance programs as they seek to stabilize their individual insurance marketplaces.  

“With the 1332 waiver approved by the federal government and signed into effect by Governor Walker, we not only begin the work of implementing the law, but we are working on other approaches to help lower costs,” said Wisconsin Commissioner of Insurance Ted Nickel.

“If Congress continues to avoid action, states will need to continue to take the lead to protect our citizens from the negative consequences of the ACA. We hope we can find other approaches to lower costs and more competition in the Wisconsin health insurance market.”


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