State officials project reinsurance plan will reduce premiums by 3.5 percent, avert another significant hike
by Chris Rochester for the MacIver Institute
MADISON, Wis. – The Trump administration on Sunday approved a plan by Gov. Scott Walker to stabilize Wisconsin’s individual health insurance market by implementing a reinsurance plan for health insurers offering plans in the state.
The reinsurance plan is expected to cost $200 million a year, with about $34 million a year coming from state coffers. But state officials project it will lower premiums for those on Obamacare by 3.5 percent, reducing premiums by 11 percent compared to possible rate hikes without the program.
Under Walker’s plan, the state will cover up to 80 percent of private insurance companies’ claims that fall between $50,000 and $250,000, which is intended to mitigate insurers’ losses and encourage them to lower their rates.
Walker asked federal permission to implement the reinsurance plan after last year’s 44 percent increase for people on Obamacare, just the latest double digit increase in premiums in the wake of the disastrous health care law that just last year cost 75,000 Wisconsinites their health insurance plans as insurers continued to flee the market.
“People in the individual market saw their premiums go up by 44 percent on average last year, and some saw much larger increases – that’s unsustainable and unacceptable…Thankfully, the federal government is giving us the flexibility to implement a Wisconsin-based solution to help stabilize premiums,” Walker said in statement.
In the absence of action by Congress to repeal Obamacare and implement market-based reforms, Insurance Commissioner Ted Nickel said it’s up to the states to protect their citizens from the rising costs of health care. In addition to the reinsurance program, Wisconsin is working on other cost-saving measures, Nickel said.
“If Congress continues to avoid action, states will need to continue to take the lead to protect our citizens from the negative consequences of the ACA. We hope we can find other approaches to lower costs and more competition in the Wisconsin health insurance market,” Nickel said.
The request for the so-called Section 1332 Wavier, which allows states to implement their own innovative approaches to reduce the cost of health care, was submitted to the federal government in April.
Chris Rochester is the Communications Director for the MacIver Institute. This story appears courtesy of the MacIver Institute and is an update of their April story on the reinsurance plan.