States are hurriedly pursuing legislation to try to stabilize Obamacare’s insurance exchanges and bring down prices next year after congressional efforts to do so collapsed.
The most common approach states are taking is to set up a reinsurance program, which covers an insurer’s sickest claims and gives the company an incentive to lower premiums overall. Other states are pursuing efforts to expand competition on the Obamacare exchanges, and a handful want to bring back the requirement that everyone has insurance, which was repealed in Congress’ tax legislation.
Some states were moved to act after Congress failed to pass a major stabilization effort that would have injected billions of dollars into propping up Obamacare’s exchanges, which have faced double-digit rate increases partly because of moves by the Trump administration and the repeal of the individual mandate.
“This problem should have been solved in Washington, but nothing has been done,” Republican Maryland Gov. Larry Hogan said when he signed into law a one-year reinsurance program last week. “Our team has been working on potential solutions for more than a year.”
Thirteen states have considered legislation this year to stabilize the exchanges, most of them seeking to create a reinsurance program and seek a necessary waiver from the Trump administration.
Of the 13 states, Maryland and Wisconsin are the only ones that passed laws for stabilization plans, according to data from the National Conference of State Legislatures.
Virginia and Indiana’s governors have yet to act on bills that passed their respective state legislatures, and eight other states have legislation pending. Wyoming is the only state where the legislation has failed, according to the National Conference of State Legislatures.
Since 2017, at least 35 states have considered legislation to start the application process for a waiver. Of the 35 states, eight have submitted applications.
The federal Centers for Medicare and Medicaid Services, which makes the final decision, has approved stabilization plans for Alaska, Hawaii, Minnesota, and Oregon.
A major question for states is when the federal government will approve new requests, if at all.
“It would certainly be helpful if states were going to enact stabilizing measures to do that before June so insurers knew what the playing field would be,” said Jennifer Tolbert, director of state health reform for the research firm Kaiser Family Foundation.
Tolbert is referring to the deadline for states to apply with the federal government to sell plans on the exchanges. The rates for the 2019 coverage year are finalized in the fall, before open enrollment starts on Nov. 1.
“The lesson learned for states last year was that this is a lengthy process, so the earlier in the year that a state can submit a waiver request, the more likely they will have a decision before the start of the open enrollment period,” Tolbert said.
CMS said it is working to give states as much flexibility as possible under the law.
Some states are adopting different approaches. For example, Washington state recently passed a law that requires insurers to offer more plans on the marketplace.
The law requires insurers to sell plans on the Obamacare exchanges if they want to offer plans for state employees or teachers. A handful of states are considering legislation to approve their own version of the individual mandate, Tolbert said. New Jersey’s state legislature approved a measure last week setting up its own individual mandate, sending the bill to the governor along with a reinsurance bill.
Obamacare’s individual mandate, which requires people to buy health insurance, was repealed in the Republican tax legislation starting in 2019. Insurers are worried it will cause younger and healthier people to flee the exchanges and prices to spike.
The nonpartisan Congressional Budget Office has predicted the loss of the mandate will cause premiums to increase by 10 percent each year.
Congress tried in March to pass legislation that created a $30 billion reinsurance program. The legislation also would have funded cost-sharing reduction payments sent to insurers.
But bipartisan support for the legislation collapsed over a disagreement on abortion funding. The must-pass spending bill was viewed by supporters of the legislation as the last, best opportunity to get it through Congress.
