Facing an Empty Exchange, Iowa Suggests Statewide Insurance Plan
To save its health insurance exchanges from complete collapse, Iowa has asked CMS for a waiver to create a state healthcare plan.
Source: Thinkstock
By - If Iowa’s health insurance exchanges are completely abandoned, the state will request that the federal government allow the establishment of a state health care plan for 2018.
If approved by CMS, the stopgap measure would create the Iowa Proposed Stopgap Measure (PSM) Plan. The plan would be available to all eligible Iowa consumers on the health insurance exchanges for 2018.
The proposal requests a Section 1332 waiver under the Affordable Care Act (ACA). If the waiver is not sufficient to allow the creation of a new statewide health plan, then the state would like CMS to “consider this to be a formal request for emergency regulatory relief as permitted by the referenced Executive Order,” the measure stated.
The plan was triggered by the possibility of approximately 72,000 Iowans who may lose coverage if the state’s ACA exchanges evaporate.
The Iowa PSM would include three components: one plan for all eligible residents, premium subsidies based on age and income, and a new reinsurance program for high-cost members.
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The plan would preserve all mandated ACA essential health benefits and meet the requirements for a Silver Tier plan. The plan will also not contain individual or lifetime limits.
“While the long-term goal is, and should continue to be, a permanent solution to ensure market stability, in the short term there needs to be an option for Iowans to purchase individual health insurance for 2018,” says the measure.
If approved, the waiver will take effect immediately and allow insurers to decide whether they will carry the Iowa PSM Plan for the 2018 calendar year. Except for any grandfathered plans, the Iowa PSM Plan will be the only plan available on the state exchanges.
The ACA in Iowa has brought mixed results. Over 150,000 people have received coverage through the ACA Medicaid expansion, but the state’s individual commercial market has experienced a steady decline of participating insurers.
The state has seen a high-profile departure of several major payers with UnitedHealthcare exiting in 2016, joined by Wellmark and Aetna in 2017.
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The decrease of carriers has been matched with a decrease in enrollment and a rise in individual premium prices, some of which have doubled since 2014.
The state currently has two insurers remaining on its health insurance exchanges, Medica and Gundersen Health Plan, although neither have finalized plans for participation in 2018.
Medica has previously indicated it will exit the marketplace, and if joined by Gundersen, this will leave the state’s 99 counties completely absent of payers.
Section 1332 waivers under the ACA were designed to allow states to pursue innovative strategies to provide the residents with access to high quality, affordable health coverage. The waivers specify that the states provide access to health care that meets three requirements: the coverage offered is comparable and affordable to that which existed before, that coverage is provided to a comparable number of residents, and that the waiver coverage offered does not increase the federal deficit.
Funding for the Iowa PSM Plan would be budget neutral to the federal government by utilizing existing federal premium subsidies and tax credits. The estimated premium funds of $352 million would be directed towards a reinsurance program and individual premium credits.
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For a payer to receive reinsurance funding, they will have to offer the Iowa PSM Plan.
According to the proposal, Iowa has “engaged in detailed conversations about the PSM Plan with several insurance carriers and anticipates that one or more of these carriers will commit to offering the Iowa PSM Plan in 2018.”
If enacted, the Iowa PSM Plan will be available during the open enrollment period of November 1 to December 15, 2017. For residents who do not purchase during the open enrollment, there will be a special enrollment period. To qualify, applicants will be required to show proof of continual coverage for the previous 12 months.
If multiple payers offer the Iowa PSM Plan in 2018, they will be required to comply with the federal risk adjustment program.
The state estimates Iowa Plan premium subsidies would be $220 million, which may vary based on the actual enrollment count, age, and incomes of participants.
The premium credit will be directly paid to the payer as with current ACA policy.
A key part of the Iowa PSM Plan is the use of federal funds to supplement the state’s existing reinsurance program. The proposed plan would partially reimburse payers for high-cost members who incur over $100,000 in claims. There would be a claim cap of $3 million.
The $100,000 starting point was designed to encourage carriers to be more actively engaged in successful care management that drives down costs.
Any claims above $3 million would be completely covered by the reinsurance program, combining federal and Iowa PSM Plan funds. The motivation for this complete reimbursement guarantee is to keep high-cost claims from being passed on to members, and hopefully keep future premium rates lower.
The current estimate for the funds needed for complete reimbursement is $80 million, dependant on enrollment numbers and needs.
The state has requested a fast track waiver approval from CMS.
“Iowa has a history of a strong health insurance market, and when left to its own devices, we are confident that we can do this again. We need flexibility and support from DHHS and CMS to do so. Without this emergency relief, 72,000 of Iowans will have no options for health insurance,” as stated in the stopgap measure.
