HSRI applying for reinsurance, sole proprietor access to employer market

PROVIDENCE — HealthSource RI is beginning work to apply for two 1332 waivers through the Centers for Medicaid and Medicare Services for a reinsurance program to reduce Affordable Care Act individual market premiums and to allow sole proprietors to purchase health insurance from the employer exchange.

The Rhode Island Market Stability and Reinsurance Act, sponsored by Senate Health and Human Services Committee Chairman Joshua Miller, D-Cranston, and Rep. John G. Edwards, D-Portsmouth, and signed by Gov. Gina M. Raimondo July 3, is meant to help stabilize health insurance rates and premiums in the individual market using reinsurance. Reinsurance helps reduce the size of premium increases by paying for some of the most expensive claims for some consumers in the individual market.

The law authorizes the state to begin the federal waiver application process and does not commit any state funding.

“This law will help address the high cost of health insurance for consumers and help ensure that those with health issues will be able to get coverage, particularly in light of efforts in Washington to undermine the Affordable Care Act. Every way we can lower costs overall and costs to individual patients is an improvement that makes the costs of maintaining good health more achievable to Rhode Islanders,” said Miller.

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The application for the waiver requires actuarial work, said Kyrie Perry, spokeswoman for HSRI, including determining what the market is expected to look like and the funding level. An RFP for the reinsurance actuarial work has already been posted.

The Market Stability Workgroup reports a reinsurance program that would cut health care rates by 10 percent instead of the projected increases would cost $26 million, with $15 million funded through pass-through savings and another $11 million needed before moving forward, said Perry.

HSRI Director Zachary W. Sherman pointed out that New Jersey has used its state-based individual health insurance mandate to fund its reinsurance plan, and that it may be an option for Rhode Island.

The Market Stability Workgroup reports that revenue from penalties charged to the uninsured, mostly from households with income below $75,000, was $8.6 million in 2015, and the estimated 2016 revenue was $9.7 million.

Efforts to fund the reinsurance program will begin during the next legislative session in 2019, Sherman said.

According to actuarial firm Millman, 1332 waivers require states to prove that the waiver allows coverage as comprehensive and affordable as the ACA, while not increasing uninsured numbers or the federal deficit.

“I am very confident we will be able to do that,” said Sherman. He pointed out that Minnesota, Arizona and Alaska have already proven to the CMS that they can do that.

Also, he said, CMS has instructed states to do what they can to lower premiums, using the reinsurance waivers as an example of that in action, noting, “They would be very open to other states doing that,” he said.

Federal savings realized by lower premiums and matching funding from other sources would be identified and proposed separately through 2019 state legislation.

The state will also seek an actuary to prepare another 1332 waiver to allow sole proprietors access to the HSRI employer marketplace. Such business owners had that ability until ACA rules ended it in 2016.

Although rates between the individual and employer small group market are comparable, the latter provides flexibility including access to platinum plans, non-January start dates and enrollment assistance through health insurance brokers.

An actuarial review to ensure that waiver won’t add to the federal deficit over the next 10 years is also required, Sherman said.

Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.