Governor Steve Bullock is creating a bipartisan working-group to develop a plan to reduce premiums for people who buy health insurance on the federal marketplace.
A Montana Healthcare Foundation study found that reinsurance programs insulate insurers from very high claims and save consumers money.
“We’ve got to figure out ways to make sure we stabilize rates on the private market," Bullock says. "And excited about working together with folks on how we might be able to do that."
Edward O'Brien: Reinsurance does that how?”
“Part of what we are going to be digging into is what the best model may be for Montana in doing that. So, putting the cart a little bit ahead of the horse on that, but as we roll that out I’d be more than happy to get back on with you and talk with you about what we’re finding.”
State Auditor and Insurance Commissioner Matt Rosendale agrees that reinsurance in an intriguing idea. And the Republican U.S. Senate candidate is asking why Democrat Bullock vetoed a bill passed by the 2017 Legislature which would have allowed him to propose just such a plan.
Bullock’s response? That particular proposal would have given the insurance commissioner too much power.
Reinsurance will be one of BlueCross BlueShield of Montana’s top priorities during the 2019 legislative session.
John Doran is a spokesman for the company, Montana’s largest health insurer.
“This would be isolated to the individual market, which covers about 60,000 Montanans and holds great potential to drive down premiums by as much as 20 percent.”
Doran says eight states are successfully using reinsurance programs to drive down premiums, “And keeping stability in that marketplace.”
According to Doran, the Affordable Care Act, or Obamacare, was designed to usher stability into the health insurance market. He says that hasn’t really panned out. For example, the tax penalty for the individual mandate -- the requirement to have health coverage, will be eliminated next year. Last year the Trump administration ended some cost-sharing subsidies designed to decrease healthcare expenses.
Doran says the third factor driving health insurance instability is the expansion of what are called short-term policies.
“Certainly, short-term plans offer a little more choice for Americans and for Montanans, but they don’t typically cover a lot of things like behavioral health or prescription drug plans; often times not maternity care or there’s not air ambulance coverage. Some of these things that may drive down the price for short term limited duration policies also increase the volatility in the individual marketplace.”
Doran explains how reinsurance benefits consumers.
“In a reinsurance pool what you do is you essentially attach a point for a high-dollar claim; let’s say it’s a $100,000 claim. And then you put a ceiling – it could be a $1 million or $1.5 million claim – and then everything in between is essentially taken out of the calculation for premiums and paid for through the reinsurance pool.”
A Montana-run reinsurance program would be funded with a mix of federal and state dollars. Montana would submit a waiver to the federal government.
Doran says that would, “Allow a portion of the funds that are already coming to Montana in the form of premium reductions to be used to offset those high-cost claims and therefore drive down premiums. The state would have to pick up a portion of that funding from the general fund budget – there are a number of different ways we could consider doing that, but about 70 to 75 percent of the total funding would come from the federal government.”
All could be accomplished, says Doran without increasing the federal budget, offsetting Medicaid dollars or Medicaid expansion funding.
The open enrollment period for 2019 Marketplace coverage runs from Thursday, November 1 to Saturday, December 15.