By Bryan Clark, Idaho Falls Post Register
BOISE — The House Health and Welfare Committee received an hour-long presentation Wednesday on the benefits of an innovative set of waivers designed by state agencies to address rising health insurance costs and make cheaper private insurance plans available to those in the Medicaid gap.
“This approach will make a difference in thousands of Idahoans’ lives,” said Director of Insurance Dean Cameron, a former senator. “It will help those with severe health conditions with better coverage at lower cost. It will help families who couldn’t previously qualify for assistance because their income isn’t high enough, a basic unfairness that exists in today’s marketplace. And it will help Idahoans who are buying individual plans on Idaho’s marketplace, even outside the exchanges, with lower costs.”
Branded the Idaho Health Care Plan, the dual-waiver proposal would involve seeking two federal waivers from provisions of the Affordable Care Act. In order to be enacted, the plan will require approval both from the Legislature and the federal government.
The 1332 waiver would allow Idahoans in the Medicaid gap — mostly working families who make too much to qualify for Medicaid but not enough to qualify for subsidies to offset premiums — to receive federal premium support to make private health insurance plans affordable. The 1115 waiver would move a few hundred individuals with very high health care costs onto Medicaid in an effort to push down premiums in the private individual market.
If passed, the plan is expected to extend low-cost coverage to an estimated 35,000 people in the Medicaid gap, though it won’t provide coverage for those who fail to file federal tax returns. The coverage would come from plans on Idaho’s health insurance exchange, and they would provide all the essential benefits required under the Affordable Care Act. They would be covered under the same benefits as green card holders, a higher level of benefit than is currently available to Idaho citizens in the gap. The transition of high-cost patients to Medicaid would be voluntary, and it wouldn’t be available for those who have access to an employer-provided plan.
Cameron said the proposal would address issues of basic fairness in the current health care system.
“I can’t tell you, in my former career as an insurance agent, how frustrating it was to me to sit down with a family and have one family qualify for assistance and the next family, with lower income, not qualify for any assistance,” Cameron told the committee. “Or to have a family of four with two kids qualify for assistance, and then they inform me that they’re expecting. And we recalculate the rates and find out that with one more child, they no longer qualify for assistance. Or to have a situation where I deal with a legal non-citizen, and they get assistance, but a citizen with the same income doesn’t get any help.”
The cost to state taxpayers is expected to be $29 million. Including federal funds, the program would cost $100 million.
Cameron said a problem with the individual market has been that the mix of patients in it has become sicker, causing large premium hikes over time. In the most recent reporting period, five of the six insurance companies who were offering plans on the state exchange reported they paid out more in claims than they received in premiums.
The plan would result in an estimated 2,500 to 3,500 people with very high-cost conditions, such as metastatic cancer and hemophilia, being added to the Medicaid rolls. While that’s a tiny portion of Idaho’s overall individual market, that group of high-cost patients are responsible for a large portion of overall health care spending.
For example, according to data provided to the Department of Insurance by insurers, the five Idahoans in the individual market with hemophilia claimed an average of $251,000 in health care costs last year, and the 31 with bone marrow disorders had average claims of $187,000.
So the 1115 waiver essentially functions as an expansion of Idaho’s high risk pool. Insurance companies operate by taking in monthly premium payments from patients. They use those funds to pay for covered medical expenses from patients. High-risk pools work by taking the highest-cost cases out of the insurance companies’ risk pools. That means they can make a profit while charging the patients less for plans. The Department of Insurance estimates the waiver would result in a 20 percent reduction of premiums for plans in the individual market.
Some lawmakers, including Rep. John Vander Woude, R-Nampa, and Rep. Karey Hanks, R-St. Anthony, asked whether those characterizations were correct.
Cameron indicated the criticisms weren’t serious. The plan is clearly not Medicaid expansion as envisioned by the Affordable Care Act, he said. If it were, the feds would cover 90 percent of the program’s cost. Because the plan avoids expansion, the federal matching rate will only be about 70/30.
The plan wouldn’t bail out insurance companies either, Cameron said. It would bail out the working poor in the Medicaid gap who can’t afford insurance, and the rest of those in the individual insurance market by sharply reducing premiums. He pointed out that insurance companies have to file rate justification paperwork each year, and the department has to sign off on any premium hikes, so insurers won’t be able to avoid reducing premiums.
Clark can be reached at email@example.com.