Wyoming’s Department of Insurance is preparing a federal waiver to help cut the state’s high premium prices for Obamacare exchange plans, officials told lawmakers Thursday, though some legislators regarded the plan as too good to be true.
The plan involves Wyoming filing what’s called a 1332 waiver, which under the Affordable Care Act allows states to pursue “innovative strategies” to provide high quality care to residents at an affordable price. Such waivers have been employed by a handful of other states, including Alaska, which is similar to Wyoming in demographics and number of people who have purchased insurance via the exchanges.
Before the waiver can be submitted, it would have to receive legislative approval, state Insurance Commissioner Tom Glause told the Labor, Health and Social Services Committee. Though his department is still waiting on a consultants’ report on the exact way forward, Glause told the lawmakers that Wyoming’s 1332 waiver plan would likely call for the creation of a reinsurance program, which is what Alaska has developed.
Both major gubernatorial candidates — Republican Mark Gordon and Democrat Mary Throne — have expressed support for the waiver in recent interviews with the Star-Tribune.
Not only does the Legislature need to approve the waiver, but it also has to set aside funding to pay for whatever plan the waiver proposes. That cost to the state is also unclear, though Glause said the majority of the bill would be borne by the federal government.
He explained that the reinsurance program would essentially take the people on the exchange who are sickest — and thus most expensive to Wyoming’s one exchange insurer — and place them into a separate pool. Their care and prices would remain the same, he said, but it would insulate the broader insurance pool.
Wyoming’s insurance exchanges are among the most expensive in the country. Indeed, last year, the sole provider on the exchanges, Blue Cross Blue Shield, announced it would raise premium prices by nearly 50 percent. A spokeswoman for the insurer said uncertainty from Washington prompted the rate hike. Blue Cross Blue Shield was concerned that the Trump administration would stop reimbursing insurance companies for the cost-sharing reductions the providers were required to pay to low-income customers. A few weeks later, the administration did just that.
For 2019, Wyoming’s exchange premiums are expected to remain essentially flat.
Glause explained that while Wyoming would pay some amount of money for any reinsurance program, the federal government would likely chip in more. If the premium prices fall, then the amount of money the government gives to consumers in the forms of subsidies would also fall.
That money, in turn, will be turned back to the state to help pay for the program. Glause told the committee that of the nearly 25,000 Wyomingites who have health insurance through the exchanges, more than 22,000 receive subsidies. The average subsidy is more than $900 a month.
The reinsurance program could save the government $225 each month for every person who receives a subsidy on the exchange. That equates to nearly $60 million annually, Glause said.
“This is the seed money for the reinsurance pool,” he told lawmakers.
In February, Alaska’s insurance commissioner announced that the state would pay just $1.5 million — well below the expected number — toward its reinsurance program. The federal government, meanwhile, was paying $58.5 million.
Glause noted the similarities between Wyoming and Alaska. Both have just one carrier on the exchange. The two states have some of the highest exchange premiums in the country. Both are rural and both have similar numbers of people on an exchange plan, with similar amounts of those people who receive subsidies.
Before the introduction of the reinsurance program, Alaska’s exchanges were facing an increase of at least 25 percent. The program “was able to temper that to a 7 percent increase,” Glause said. In 2018, premium prices then actually fell by 20 percent, according to the Alaska Journal.
Some lawmakers seemed skeptical. Casper Sen. Charlie Scott, the Republican co-chairman of the committee, said the plan sounded like a “shell game,” and he questioned whether it was just a “circle that creates more bureaucracy just to get us to the same result.” Rep. Pat Sweeney, a Casper Republican, said it sounded like a “Ponzi scheme” and seemed “too good to be true.”
But, he added, if “there’s assurance we’re not going to get sucked into something else and it is true that it’s a good deal for our citizens, I think we need to move forward.”
Glause said that he, too, had initially wondered if the reinsurance program was just a shell game. But he said the plan would help the small group of Wyomingites who have an exchange plan but aren’t receiving a subsidy — and are thus paying nearly $1,000 a month, on average. If Wyoming can achieve a 25 percent reduction, that person would be paying $750 instead.
“Not because of a shell game but because we’ve used subsidy money,” he said. “It’s an invisible reinsurance pool. People wont even know they’re in it. The only thing they’re going to see is a reduction in their premiums.”
Rep. Scott Clem, a Gillette Republican, said the plan would spend health care money “a little more wisely and prudently.”
But Sen. Scott remained unconvinced.
“It still has the smell of a something-for-nothing scheme,” he said, adding that it was “suspicious.” He asked Glause if the state or the federal government was assuming the risk, should the reinsurance pool of sicker individuals is much more expensive than expected.
“That’s absolutely a question that needs an answer,” the insurance commissioner replied. “I don’t have a good answer to give you at this time. But one thing we want to do is make sure we have guard rails that protect us and make sure we don’t assume the federal government’s risk.”
Scott said the legislation prepared by Glause and presented to the committee Thursday was “too bare bones” and that he would never vote for it. He proposed stricter language, including requiring the governor’s approval and giving the state the ability to discontinue the program.
Glause said the Insurance Department would have preliminary numbers on the cost of the program in November.