Alex Rossman is the External Affairs Director at the Michigan League For Public Policy (MLPP). In this Q&A, he discusses how the Inflation Reduction Act will impact the health insurance marketplace and Michiganders.
Stay one step ahead. Join our email list for the latest news.Subscribe
State of Reform: How will Whitmer’s recent directive to health insurance companies to lower costs, under the Inflation Reduction Act, impact these companies and the health insurance marketplace?
Alex Rossman: “Savings and more affordable coverage for consumers leads to more engagement in the marketplace, including generally more engagement from healthier individuals. That will ultimately lower risks for insurers and set up savings for the insurance company. The governor, the [Michigan Department of Insurance and Financial Services], and my organization would all like to see those savings pass back to consumers. In the logistical sense, insurers had to plan their 2023 rates before there was clarity on the fate of the premium tax credits and whether they would be extended. When those premium tax credits were expected to end, insurers anticipated needing to increase prices, and so what is on the books rate wise does not have the important context of the extension of the premium tax credits.
The IRA and the premium tax credits are going to have this direct impact on consumers but are really going to benefit the marketplace and participation as a whole, and ultimately the insurers as well. I think what we’re trying to do and what the governor and the Department of Health asserted is that both anticipated benefits and savings should go back to the consumers.”
SOR: How will this provision of the Inflation Reduction Act impact Michiganders?
AR: “We have data from some of our national partners that about 271,000 residents in the state will benefit from the extension of the premium tax credits. So far in 2022, it’s estimated that they were saving consumers around $800 a year. And so there’s a real direct impact on individual households and individual pocketbooks. But the overall effect that the changes will have on the marketplace is on the subsidies by making obtaining health insurance more affordable and a more attractive option for people with lower expected health care needs. It makes health insurance coverage more affordable and accessible for perhaps individuals who need it [both the most and the least], and then that benefits the pool and the company. So it really has kind of a universal benefit.
[More affordable health insurance will benefit] individuals in both their fiscal health as well as their physical health, because when insurance is unaffordable, it leads consumers to skip out on screenings and standard checkups and health services. They tend to go to emergency rooms for non-emergency care, and all of that ultimately increases costs for the hospitals as well as the state. So, generally, making insurance coverage more affordable makes it more attractive when you’re looking at people with better health that don’t anticipate needing a lot of medical care visits.
It results in broader savings for the health system as a whole when individuals are getting those health screenings and treating those health issues earlier on.”
SOR: What other impacts will the Inflation Reduction Act have on Michiganders?
AR: “We’re very excited about the passage of the Inflation Reduction Act and a number of provisions in it. One of the aspects of our organization’s mission is advocating for individuals with lower incomes. So we in particular advocate for health insurance affordability from the perspective of not wanting anyone to be priced out of care or life-saving drugs. In addition to the premium tax credits we’ve talked about, another big provision that would benefit lots of Michiganders and stand to have a ripple effect through the health care system is the provision with Medicare being able to negotiate drug prices and a $2,000 cap on out-of-pocket prescription drug costs.
Previously, Medicare was not able to leverage its purchasing power as a large service provider to negotiate lower drug costs for seniors. With Michigan’s proximity to Canada, you hear a lot about individuals that go to Canada to get their prescription drugs because of more affordability there. So that really is a big, important piece. Generally, that will lower prescription drug costs for seniors, and seniors in particular are a population that have a lot of ongoing medication needs … So this is a really positive opportunity for Medicare with the size and scope of the coverage they provide to use that as leverage to negotiate these prices, aiming to negotiate the price ceilings for the 20 most expensive medications by 2029.
Thankfully, Michigan was one of the states that very early on under the Affordable Care Act was able to find bipartisan agreement and expand Medicaid, create the Healthy Michigan plan, and we continue to see the benefits of that. But I know at one time, during the Build Back Better discussions and even earlier conversations of the Inflation Reduction Act, there was a possibility that there would be a provision to close the coverage gap related to the 2.2 million people in states that haven’t expanded Medicaid and essentially doing it at the federal level. From an advocacy standpoint and a health policy standpoint, we are continuing to advocate for similar action to benefit those other states that haven’t [opted to expand Medicaid yet].”
This interview has been edited for clarity and length.