Wisconsin: Thanks to reinsurance, 2019 rates expected to DROP 3.5%...but they WOULD have dropped by up to ~16% w/out sabotage

2019 OPEN ENROLLMENT ENDS (most states)

Time: D H M S

January 2018:

It looks to me like after his short-lived 2016 Presidential campaign (seriously, it only lasted 70 days...heck, even Lincoln Chafee's campaign lasted twice as long), Wisconsin Governor Scott Walker decided to go back to shoring up his image in his home state...and since Wisconsin is one of 14 states which doesn't have any term limits for the top spot, it looks like he's scrambling to move back to the center policy-wise just in time to run for a third term this November:

Scott Walker proposes plan to prop up Obamacare marketplace

After years of fighting Obamacare, Gov. Scott Walker is now seeking to stabilize the state marketplace under the law.

Wisconsin plans to seek federal permission to cover expensive medical claims for health insurers on the marketplace, which should lower premium increases and could bring back companies that dropped out, the governor said in an interview with reporters on Friday ahead of his election-year State of the State address Wednesday.

The state will also ask to permanently continue SeniorCare, a prescription drug program Walker has previously sought to pare down, he said.

Walker also said he’ll ask the state Senate to pass a bill authored by Democratic lawmakers and passed by the Assembly that would enshrine into state law access to private insurance for people with pre-existing conditions.

In the most significant of his health care proposals, Walker will ask the Legislature to join a few other states in adopting a reinsurance program to prop up the individual market, which is used by some 216,000 residents, in a state innovation waiver allowed under the Affordable Care Act, or Obamacare.

Yes, that's right: Hard-right "Obamacare is Evil!" Scott Walker did a complete 180 now that the ACA is suddenly popular and he isn't.

In April I posted a follow-up with some more specifics about the proposed reinsurance program:

Gov. Scott Walker's administration filed a request with the federal government seeking a waiver that would allow Wisconsin to offer a $200 million reinsurance program designed to lower premiums and attract more providers to the private marketplace.

...Under the reinsurance program, the government would provide money to health insurance providers to pay about 50% of medical claims costing between $50,000 and $200,000 starting in 2019. Deputy Wisconsin insurance commissioner J.P. Wieske said insurance providers will be required to file reports showing what rates would have been without the program so the savings could be calculated.

...Walker, a longtime critic of the national healthcare law known as "Obamacare," has rejected federal money to expand Medicaid and argued for years that the law should be repealed. But this year, as he faces re-election in November, Walker has pushed the reinsurance proposal as a way to stabilize the market and lower premium costs for the state's roughly 200,000 people who purchase insurance under the law.

OK, so that's the structure: 50% of claims between $50K - $200K, with an estimated cost of around $200M total. Fair enough. So where's the money coming from?

Walker originally said the state's share under the 5-year program would be $50 million annually with the federal government picking up $150 million. But he said Wednesday the state's share, to be taken from unspecified Medicaid savings, would actually be $34 million a year with the federal government paying the rest.

Regardless of why he's doing it (clearly he's just trying to save his bacon in November), the fact remains that this is exactly the type of standard reinsurance program which I'm pushing every state to embrace. It's an inherently good thing regardless of the politics.

The only concern I have about it is, again, where the state's share of the money would be coming from.

Well, over the weekend CMS Administrator Seema Verma, who's been extremely hostile towards most other aspects of the ACA to the point of deliberately undermining many of them, showed once again that she's very much on board the reinsurance train:

The Centers for Medicare & Medicaid Services approved a waiver request from Wisconsin on Sunday to create a $200 million reinsurance program designed to lower exchange premiums across the state.

The approval marks the first time this year that the Trump administration has approved a state innovation waiver under Section 1332 of the Affordable Care Act (ACA). The provision allows states to implement innovative strategies to provide residents with access to health insurance within the basic parameters of the ACA.

With its approval (PDF) from CMS, Wisconsin will create a 10-year program that reimburses insurers as much as much as $200 million annually for high-cost patients. Under Wisconsin's Health Care Stability Plan, signed into law by Gov. Scott Walker earlier this year, the state would provide coverage for claims between $50,000 and $250,000, with the state picking up 50% of the tab.

The plan is expected to lower average premiums by 3.5% compared to 2018 rates, representing an 11% cut if the waiver wasn't approved. State officials predict enrollment will increase by 1% as a result of lower premiums.

NOTE: I"m not sure where they're getting the 3.5% and 11% figures...the waiver itself as well as the Wakely analysis referenced in the Fierce Healthcare article put official projections at a drop of 5.4% relative to 2018 and 10.6% relative to where 2019 rates would otherwise be. (whoops...never mind, see update below)

“People in the individual market saw their premiums go up by 44% on average last year, and some saw much larger increases—that’s unsustainable and unacceptable,” Governor Walker said in a statement. “Thankfully, the federal government is giving us the flexibility to implement a Wisconsin-based solution to help stabilize premiums."

While the reinsurance program includes $200 million in funding, a large portion of that will come from the federal government in the form of "pass-through savings." An analysis (PDF) conducted by Wakely on behalf of the state determined that the federal government would save $166 million from lower premium subsidies, which would be used to fund the program beginning in 2019. The remaining $34 million would come from the state.

Again, the main question here is where Walker is gonna get that other $34 million. The last I heard it was from "unspecificed Medicaid savings", which could mean just about anything. I haven't any details on that as of yet, but will update this if I find out.

I'm going to temporarily plug a 5.4% average premium drop into my 2019 Rate Hike project spreadsheet for now, but this will be updated once Wisconsin's actual 2019 rate filings are posted.

Of course, it's also extremely important to keep in mind that the reinsurance program is completely separate from the ACA sabotage efforts by the Trump Administration and Congressional Republicans including repeal of the ACA's individual mandate and the expansion of #ShortAssPlans.

The March 2018 Urban Institute analysis/projection of the impact of these factors on 2019 ACA individual market premiums estimated that Wisconsin rates would go up around 20% as a result. Using my standard protocol of erring on the side of caution, I'm going to knock 1/3 off of this and assume a 13% average impact statewide.

Assuming this is close to accurate, it means that without the mandate/shortassplan factors, Wisconsin would likely be looking at rates dropping by around 18% next year instead of 5.4%.

UPDATE: OK, it looks like the actual 2019 rate filings have come out and do average around 3.5%, according to this official press release from Walker's office:

JUL 29, 2018

Lowering the Cost of Health Care: Individual Market Premiums Expected to Drop 3.5% on Average Next Year Thanks to Governor Walker’s Health Care Stability Plan

GREEN BAY – Governor Scott Walker today announced his Health Care Stability Plan was approved by the federal government and is expected to lower 2019 premium rates in Wisconsin's individual health insurance market on a weighted average by 3.5 percent from 2018 rates and by an estimated 11 percent as compared to without the waiver, based on initial rate filings received by the Wisconsin Office of Commissioner of Insurance (OCI). While not every consumer will see their rates decrease, this is a significant change from the 44 percent rate increase the average Wisconsin consumer saw last year.

I still don't see the actual filings listed at the SERFF database, however, so I'll still have to use my "2/3 of Urban" estimate (13%) for the sabotage factor impact for the moment.