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Iowa insurance commissioner talks challenges, opportunities of Affordable Care Act

Nick Gerhart told a U.S. Senate Committee policy makers need to work together

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There may be a good deal of political controversy still surrounding the federal Patient Protection and Affordable Care Act, but Iowa Insurance Commissioner Nick Gerhart told a U.S. Senate committee Thursday that state and federal policy makers need to work together to address the law’s shortcomings and work to ensure that state health insurance markets “remain vibrant.”

Gerhart, along with three other state insurance commissioners, spoke about the challenges and successes of the state’s insurance market before the U.S. Senate Committee on Homeland Security and Governmental Affairs.

The uninsurance rate has fallen he said, and more than 85 percent of Iowans purchasing plans through the exchange are eligible for tax credit to help subsidize their health care. In addition, accountable care organizations (ACO) set up by the state’s largest health insurer, Wellmark Blue Cross and Blue Shield, generated $35 million in health savings in 2015, he said.

“The 13 health systems participating in the ACOs achieved savings by reducing hospital readmissions by more than 22 percent, inpatient admissions by almost 8 percent and emergency department visits by nearly 4 percent, according to Wellmark,” Gerhart said.

Iowa also implemented its own bipartisan, tailored version the ACA’s Medicaid Expansion, the Iowa Health and Wellness Plan, which provides coverage to more than 150,000 low-income, childless adults, many of whom were previously uninsured.

But Gerhart cautioned the committee that not all of his news is positive.

“While the ACA has increased health coverage for Iowans overall, the costs of health care have hit the pocketbooks of Iowans hard as rates have increased every year since 2014,” he said.

During the first year of the Marketplace, Gerhart said, many insurance policies were underpriced as insurers did not have historical claims data on the previously uninsured population. This made pricing the population very difficult, he added.

The state also has seen a few members with high cost claims drive up the premiums for the entire group — Aetna, a carrier on the state’s exchange since 2014, reported that “... the top five percent of spenders drive nearly 60 percent of the cost.”

“This concentration of risk and high utilization population is driving significant rate increases across the carriers’ individual risk pools,” he said. “The ACA does not provide adequate flexibility for a carrier to shield the risk pool from the cost of catastrophic claims.”

This has resulted in carriers requesting premium rate increases that are significantly greater than before the implementation of the ACA, Gerhart said.

He told the committee that in 2012 and 2013, the average premium rate increases among health insurance carriers was 5.48 and 5.95 percent respectively.

For calendar years 2016 and 2017:

- Wellmark received rate increases of 26.5 and 42.6 percent for its ACA-compliant, off-the-Marketplace plans.

- Aetna received rate increases of 19.8 and 22.58 percent.

“Iowa also had one statewide carrier, UnitedHealthcare of the Midlands, completely withdraw from the Marketplace without even requesting a rate increase,” he said.

“Finally, Iowa was the first state to face a failed health care cooperative, CoOportunity, in late 2014. The Iowans on that plan were forced to quickly secure other coverage in 2015. Due to the co-op failure and UnitedHealthcare’s withdrawal, Iowans looking for coverage may have limited options on the Marketplace in 2017.”

Gerhart’s full testimony can be viewed at hsgac.senate.gov .

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