The Health 202: Meet the unicorn of health-care policy by Colby Itkowitz

As we mentioned in yesterday's Health 202, Republican Gov. Scott Walker (Wis.) received approval Sunday from the Trump administration to create a "reinsurance program" to help stabilize the Affordable Care Act's individual markets. Then Monday, the Centers for Medicare and Medicaid Services cleared Maine to do the same. 

Reinsurance programs are the unicorn of health care. While most things ACA-related incite partisan rancor, these programs are supported by Republicans and Democrats alike because they're a relatively simple fix to a complex problem. 

Here's how they work: The federal government pays insurers for patients' priciest medical bill claims. Because the government is absorbing the most expensive costs, insurers can then offer lower premiums. With premiums lower, the government pays less in ACA subsidies to consumers buying on the individual market who are eligible for financial assistance. Under this model, the government and insurance companies don't lose money and consumers get a better deal.

"In some ways it's amazing more states haven’t moved to do them," said Larry Levitt,  senior vice president for health reform at the Kaiser Family Foundation. "These reinsurance program waivers are like magic money trees."

Alaska was the first state to apply for permission to create a reinsurance program at the end of the Obama administration. Its program is credited with saving the state's individual marketplace, where all but one insurer had pulled out and rates were increasing by more than 40 percent annually. The program was originally a state-funded operation, and in its first year rates increased by just single digits. In April 2017, Vox published an article titled, "How Alaska fixed Obamacare." 

Then Alaska filed an application in late 2016 with CMS reasoning that the federal government should pay the insurers' highest claim costs with the money it was saving on premium subsidies thanks to the state's program.  The Trump administration approved that request in July 2017. CMS Administrator Seema Verma called Alaska a "trailblazer."

Other states have in fact followed Alaska's lead. Minnesota and Oregon were also approved to create reinsurance programs last year; Wisconsin and Maine this week; and New Jersey and Maryland have applications pending. 

The three states where the programs are currently in effect are expecting to see insurance rate decreases or significantly lower increases than they otherwise would have seen next year. In Minnesota, for example, the state's Commerce Department announced in June that individual market rates are projected to fall between 7 percent and 12 percent in 2019.

Members of both parties blame the other side for the rise in insurance premiums every year. Democrats say it's because the GOP has created so much uncertainty around the law's future that insurers are forced to prepare for worst-case scenarios. Republicans counter that it's simply evidence the ACA doesn't work, particularly for individuals without government subsidies who tend to be small-business owners and entrepreneurs. 

But reinsurance programs have bipartisan appeal because for Democrats they serve as a way to stabilize Obamacare, and for Republicans they give more power to states and don't increase spending. They "uniquely work here because everyone is winning under them," said Heather Howard, a lecturer at Princeton who also works with states on health changes. 

Of course nothing can be completely apolitical. If you read through the states' waiver requests, it's not hard to spot where each governor's political allegiances lie. 

For example, in Wisconsin's application, the state took the opportunity to sideswipe the ACA, whereas in Oregon, the state praised the ACA, writing it needs the program to shore up the marketplace so people can continue to have affordable care and options:

"Prior to the ACA, Wisconsin had a thriving market. However, the Wisconsin health insurance market is now fragile due to a number fo unique variables that arose from implementation of the ACA."

"Oregon has seen significant improvements under the Affordable Care Act (ACA). The state's uninsured rate has been reduced from 17 percent to just 5 percent, and more individuals are able to purchase affordable coverage." 

If there's any criticism of the reinsurance plans it's that they're not a long-term solution to the problems ailing the ACA.

"It’s not a fix to overall health-care costs, but those fixes are what are so hard politically," Howard told me. "This one is easier because it’s patching a system and at least it’s helping consumers and it’s all winners. Efforts to go deeper at the problem have been elusive."

So for now, states are stepping up to govern when Washington is not. 

Source: https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2018/07/31/the-health-202-meet-the-unicorn-of-health-care-policy/5b5f59ae1b326b0207955e4f/?utm_term=.c30dd151229f