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Governors Propose Health Insurance Market Stabilization Plan

A bipartisan group of eight governors outlined a health insurance market stabilization plan in a letter to Congress.

A bipartisan group of governors suggested market stabilization efforts to Congress

Source: Thinkstock

By Thomas Beaton

- Eight state governors have outlined their proposals for a health insurance market stabilization plan that would control premium increases and improve competition in the federal and state health insurance exchanges.

In a letter sent to Congress, Governors John Kasich (R-OH), John Hickenlooper (D-CO), Brian Sandoval (R-NV), Tom Wolf (D-PA), Bill Walker (I-AK), Terence R. McAuliffe (D-VA), John Bel Edwards (D-LA), and Steve Bullock (D-MO) reaffirmed industry concerns, such as loss of coverage and rising costs, while offering suggestions to ensure healthy marketplaces as debate over the future of the Affordable Care Act lingers.

“Continuing uncertainty about the direction of federal policy is driving up premiums, eliminating competition, and leaving consumers with fewer choices,” the governors said in their letter. “Proposed premiums for the most popular exchange plans are expected to increase 18 percent in 2018 and 2.5 million residents in 1,400 counties will have only one carrier available to them on the exchange.”

In order to prevent burdensome premium increases for beneficiaries, the state officials believe Congress should start by securing funding for the cost-sharing reductions (CSRs) included as part of the ACA.  

CSRs are an extremely important part in keeping payers financially solvent for the expenses of low-income beneficiaries. The governors cited Congressional Budget Office (CBO) estimates which found that losing these payments would increase premiums 20-25 percent, and further the federal deficit by $194 billion over ten years.

The letter emphasized that Congress must explicitly appropriate federal funding for CSR payments at least through 2019.

In addition, a temporary stability fund could create reinsurance or related programs that reduce premiums and limit losses for coverage access, the governors suggested.

Recently, the House and Senate proposed $15 billion annually for states to address coverage and access disruption in the marketplace with a goal of lowering premiums and saving money on premium subsidies. The governors added that Congress should continually fund states in this manner.

“We recommend funding the program for at least two years and fully offsetting the cost so it does not add to the deficit,” the governors said.

If Congress can promote and foster insurance choice and competition in states, then consumers will have more choices and participate in a healthier insurance market, according to the letter.

Congress can encourage insurance companies to enter underserved counties by exempting these insurers from the federal health insurance tax on their exchange plans in those counties, the lawmakers suggest

“We also ask Congress to allow residents in underserved counties to buy into the Federal Employee Benefit Program, giving residents in rural counties access to the same health care as federal workers,” the letter added. “While these proposals may be temporary solutions, they will help provide Americans with additional choices until other policies have improved the market dynamics.”

Improving those dynamics will require the government to maintain the individual mandate, the letter asserts, unless policy makers can devise a credible alternative plan.

Even though the governors are aware that the current mandate is unpopular among consumers, they suggested that the individual mandate may be the strongest incentive for healthy people to enroll in coverage and improve insurance risk pools.

“Until Congress comes up with a better solution – or states request waivers to implement a workable alternative – the individual mandate is necessary to keep markets stable in the short term,” they added.

Other action items include looking into future policy reforms that improve insurance affordability, strengthening risk-adjustment programs, and giving states more leeway to choose essential health benefit reference plans.

The governors concluded their letter by suggesting a stronger state-federal partnership may help increase state-level insurance innovation that cuts costs and improves care quality.

“With the support of the federal government, states are resetting the basic rules of health care competition to pay providers based on the quality, not the quantity of care they give patients,” the group concluded.

“This is true in our states, where we are increasing access to comprehensive primary care and reducing the incentive to overuse unnecessary services within high-cost episodes of care.” 

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