Office of the Insurance Commissioner’s plan for 2019 Market Stabilization

The Office of the Insurance Commissioner (OIC) and the Washington Health Benefit Exchange (WHBE) hosted a stakeholder meeting on Wednesday to discuss possible market stabilization initiatives for the 2019 insurance market. During the meeting, the OIC gave an update on the status of the 2018 market, discussed their recently released analysis on individual market stability options, and gave an overview of their plans for the upcoming legislative session.

At the end of October, the OIC released a report conducted by the actuarial firm Wakely on options to stabilize the individual market in Washington for 2019 and beyond. The goals of stabilization are to increase affordability, promote consumer choice of health plans in all counties, avoid bare counties, and to maximize the use of federal spending. Wakely evaluated various options in the state and came to the conclusion that a claims-based reinsurance program would be the least complicated and least expensive option for Washington.

The Wakely report says this kind of program could decrease premium cost trends by 10 percent for individual market enrollees on and off the exchange, and result in a 2.5 percent increase in individual market enrollment.

For these reasons, Molly Nollette, Deputy Insurance Commissioner, announced that for the 2019 market, they would be moving forward with a state-based, claims-based reinsurance program through a 1332 waiver.

The OIC/WHBE says the program will cost approximately $230 million. In order to help pay for these reinsurance costs, the state will move forward to pursue a 1332 waiver that will utilize money saved by the government on reduced premium tax credits to help pay for part of this program.

“Reduced premiums (including for 2nd lowest cost silver plans) result in reduced federal premium tax credit outlays. Our 1332 waiver will request that this federal “savings” in premium subsidies be “passed through” to Washington state to help pay for our reinsurance program,” says the OIC.

However, it is not a simple process to get approval for a 1332 waiver. Many requirements need to be met, and they need to be met quickly. The waiver application must include actuarial and economic analyses, public feedback, tribal consultation, and the state legislature’s authorization of the waiver.

The state must also show that funding is available to pay for the program. The 1332 waiver could offset 25 percent of the reinsurance programs state costs, but the source of the rest of the funding for the program is still being worked out.

“We need to find a broad-based funding mechanism that doesn’t have one group pulling the whole freight,” said Jane Beyer, Senior Health Policy Adviser at the OIC.

In order get 1332 approval, the OIC has proposed a rapid timeline. By December 2017, the OIC plans to post a draft of the waiver for public feedback and consultations. In January 2018 they plan to seek authorization from the legislature very early in the session and submit the application to CMS as quickly as possible for preliminary review. Once the bill is signed by the governor, formal review by CMS can take place which can last up to 180 days.

This all needs to take place rapidly, so that by Spring through Fall of 2018, OIC will be able to review and approve 2019 rates and get them certified by the Exchange Board.

During the meeting, the OIC and WHBE also spent time discussing other options for stabilization that they are evaluating including a state-sponsored premium wrap or additional cost-sharing reduction wrap/subsidies.