Kreidler proposes bill to stabilize individual market, reduce premium costs
Insurance Commissioner Mike Kreidler is proposing legislation to help provide stability and confidence that over 300,000 people are able to maintain coverage in Washington’s individual health insurance market.
Kreidler’s proposed reinsurance program would encourage more health plan options in the 2019 individual market and lower premium increases by up to 10 percent.
“Over the last year, the federal government has created substantial uncertainty in the individual health insurance market across the nation,” Kreidler said. “We’ve felt those effects in our state. A reinsurance program would help counter those negative effects and provide increased stability to a market that is a vital lifeline for so many consumers in our state.”
Reinsurance provides health insurers partial reimbursement for high-cost medical claims that exceed a certain threshold. These type of claims typically involve extremely serious health issues, such as cancer, complications from diabetes and pre-mature births, among others.
The legislation (HB 2355/SB 6062) has two prime co-sponsors: Sen. Annette Cleveland, D-49th District in Vancouver (SB 6062), and Rep. Eileen Cody, D-34th District in Seattle.
“Affordable options for quality health care are paramount for residents across our state,” said Cody, chair of the House Health Care and Wellness Committee. “This proposal is an opportunity to provide over 300,000 people increased confidence about having health care when they need it and help make it more affordable. It’s a viable way to protect many Washingtonians from efforts over the last year to undermine gains made in health insurance coverage.”
Cleveland, chair of the Senate Health and Long Term Care Committee, agreed.
“This change will stabilize costs for patients by giving health care insurers in the state Exchange certainty and stability in a time of real and potential upheaval due to unexpected changes in health care policy at the federal level,” Cleveland said. “In addition to ensuring stability at such a crucial juncture, this could reduce premium increases by up to 10 percent for people who buy insurance through the individual market.”
The cost of the reinsurance program is estimated at $200 million annually with about one-fourth paid by the federal government. Financing would be done through an assessment on health insurers and entities that administer group health plans throughout the state.
Medicare and Medicaid enrollees whose coverage is paid for with federal funds would not be included in this assessment.
Kreidler’s proposal is modeled after a national reinsurance program that was in effect from 2014-16. It lowered premiums for enrollees throughout the nation, including Washington. The program also enabled more people to gain coverage and the state’s rate of uninsured dropped to 6 percent, more than a 50 percent reduction during that same period.
Given actions at the federal level, Kreidler’s office last spring began evaluation of potential stability measures for the individual market. The need for a reinsurance program became evident after health insurers reduced coverage in Washington for 2018. Nine counties ended up with just one option. Two counties had no options until Kreidler persuaded two companies to fill the gaps for this year.
Kreidler said Washington is taking action to establish a reinsurance program similar to those of Alaska, Minnesota and Oregon. Those states over the last year set up their own systems that include federal money, like Washington is seeking, to supplement state funds.
Provided the Legislature passes the legislation, the state must then gain approval from the federal Department of Health and Human Services (HHS). The bill currently sets submission of the request to HHS by April 1, 2018.
If established, this new reinsurance program in Washington would take effect Jan. 1, 2019.
Health insurers in the state will begin filing 2019 plan proposals and premiums for review by Kreidler’s office this spring.
Although the individual health insurance market represents about 5 percent of all people enrolled in health plans in Washington, it is also the most unstable. Typical enrollees include individuals and their families who do not receive health insurance through their employer; people who are self-employed; part-time workers; early retirees; and owners of small businesses.