The Iowa Insurance Commissioner has no plans to file a stopgap proposal again this year, saying he can’t fix complications with Iowa’s individual health insurance market if “the answer is the same” from the federal government.
Iowa Insurance Commissioner Doug Ommen told The Gazette this past week the Iowa individual insurance market is in a bad place, affecting thousands with high-premium rates. The solution, he said, needs to come from the federal government.
The stopgap measure was proposed by the Iowa Insurance Division in June as a short-term solution to stabilize the state’s individual market by attracting young, healthy Iowans to temper rate increases.
Ommen’s measure would have offered age- and income-based tax credits and reinsurance for costly medical claims.
State officials withdrew the proposal for federal waivers of some Affordable Care Act provisions in October.
Ommen’s comments came after an analysis released earlier this month from the Robert Wood Johnson Foundation, a not-for-profit philanthropy focused on health care. The study looked at the cost difference between 2017 premiums and 2018 premiums for an Affordable Care Act bronze plan — the least expensive plan — in 10 agricultural states, including Iowa.
While some state premiums decreased or remained the same, the analysis found that Iowa premium costs between 2017 and 2018 rose 73 percent.
Katherine Hempstead, Foundation senior adviser who conducted the analysis. blamed the increase to the high number of grandfathered and transition plan holders who are not participating in the state’s exchange.
Grandfathered plans predate the ACA passage in 2010 and are allowed to exist under a provision of the law. Transition plans were sold up until 2014, the first year of the ACA, and also have been allowed to remain.
According to the Iowa Insurance Division, an estimated 35,000 grandfathered plans and 35,000 transition plans are in force for 2018.
Ommen disagreed with the analysis conclusions, and said the problem with the state’s individual market goes beyond non-compliant plans.
Iowans who make below the target figure of 400 percent above the Federal Poverty level can receive subsidies when they purchase plans, which is meant to offset the cost.
However, if their income rises above that 400 percent line, policy holders no longer would receive those subsidies and have to pay the full cost of their plans. The example Ommen used was a 28-year-old couple with two children who could pay an annual maximum of $27,000 a year for a silver plan.
Ommen said these Iowans impacted by this 400-percent-poverty-level provision are withdrawing from the market, causing insurance rates to increase — therefore amplifying the issue.
“So you’ve got to fix the ACA to make it attractive in hopes of keeping people who are in the grandfathered and transition plans,” Ommen said. “To leave things as they are, it is not a solution to force young, healthy farmers into a market where they’re looking at $27,000 a year in rates for their family.”
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Ommen said he predicts the subsidized market “will continue to fail” this year. The immediate need for relief is for those above that 400 percent federal poverty line, who Ommen said are mostly middle class families.
“The only way to fix this is to bring those young and healthy people back into the market or in the market,” Ommen said.
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