- State health insurance markets and their individual insurance exchanges have faced regular instability in the form of payer exits, imbalanced risk pools, and rising premiums that push out new and returning insurance consumers.
As premiums go up, healthier consumers are unlikely to enroll and plans become financially unsustainable for payers which leads to market exits.
Public payer administrators, such as the Washington State Office of the Insurance Commissioner, have taken a comprehensive approach towards developing an individual insurance stabilization plan that creates reinsurance, high-risk pools, public options for coverage, and reassess premium rates based on geographic location.
Unstable individual insurance markets can have extremely negative impacts on healthcare access within a state, with one end result being a limited amount of available payers for consumers.
“We had two counties that had no insurance plan options,” said Stephanie Marquis, an outreach manager for the state agency. “We knew our rural counties, in particular, have less choices and for nine counties there is only one insurer.”
The stabilization plan aims to improve individual insurance markets for 2019 and aims to make adjustments in coverage access and participation throughout 2018 to get the ball rolling.
The state agency realized that in order to adequately develop a plan that stabilized their markets, they had to collect insurance utilization data that identified destabilizing market factors.
To do so legally, the Office of the Insurance Commissioner worked with the Washington’s Health Committee to develop a bill communicating to policymakers and payers that healthcare data would be kept confidential and only used for the purposes of building the stabilization program. Washington’s state legislature passed the bill in a bipartisan vote. After receiving approval to collect data, the state agency then took steps to properly collect it.
“We have hired a contractor, and we'll be collecting this utilization data from the insurance companies,” Marquis said.
The data collected by the state agency will help the determine the actuarial impact that of stabilization policies (e.g., reinsurance) and if they these policies truly improve risk and payer market competition.
“We plan to now create a model where we take a number of market options like a state-based reinsurance program a state offered insurance option, and see the impact of that based on utilization data,” Marquis said.
While the state has several action items in the future towards making the plan a reality, the data collection represents one of the most pressing concerns.
“We've done a data call to all of the insurance companies and we have had varying degrees of success in getting the data from the companies,” Marquis said. “But we know we will get the information. And then it will be running it through the economic model and actuarial analysis with the contractor that we've hired.”
To identify other individual insurance destabilizing factors, stakeholder collaboration between payers, providers, and consumers is essential.
Since stakeholders are the groups and individuals directly interacting with the potential changes of a new stabilization plan, they will want to know how the project impacts those interactions.
“And then we're working with providers and we’re working with our insurance companies, a lot of the consumer advocates are our stakeholders as well,” Marquis said.
“They're all going to want to see what our analysis in the reports that we come out with this fall. And then we'll be bringing possibly potential legislation next session based on our findings,” she continued.
In Washington, the rates of consumer insurance premiums are adversely high in rural counties because rates the most populated county, King County, are currently used as a benchmark for establishing the rates in other counties. According to Marquis, another legislative rule-making process with stakeholders would be required to adjust these rates.
The plan also suggests the use of Medicaid innovation waivers and specifically a 1332 waiver that creates a reinsurance program that protects payers from extremely high, destabilizing healthcare costs.
Many of the programs and data modeling are also designed to hone-in stabilization efforts on the riskiest, most vulnerable beneficiary populations with the lowest
“It's really hyper focused and it's focused on our individual insurance market of about 330,000 to 350,000 people in that market,” Marquis said. “This is about 5 percent of our market, but these are the folks that are the most vulnerable. They’re buying their own health insurance, and they don't have somebody to negotiate rates other than themselves.”
Many state insurance markets may benefit through the effective collection of insurance utilization data because it provides governments, payers, and other stakeholders highly detailed patterns and insights about how individuals are utilizing healthcare.
“Unless you know the costs, frequency, and treatments people are getting, it's very hard to determine what could have a bigger impact, what steps or what reforms or what market options could help without having that data.”
Marquis and the Washington State Insurance Office believe that this plan will significantly boost healthy consumer participation, which will allow more payers to participate in individual markets with less financial risk.
“If we can get the cost lower and we can get more greater participation and higher enrollment, than insurers are going see their costs go down because they'll have a better pool of risk,” Marquis concluded. “Payers won't have just the sick people and the people that need health insurance enrollment.”