Premiums for individual health insurance plans increased a lot for 2018. On average, costs for the lowest-priced silver plans in each state rose 32%, according to a report from the Robert Wood Johnson Foundation and the Urban Institute. But premiums didn't go up in every state.
Alaska (-22.5%), Arizona (-2%), Minnesota (-15.1%) and North Dakota (-9.8%) all saw premiums for their lowest-priced silver plans go down, setting them apart from every other state in the union. Here's what happened in these states.
Alaska had high premiums to begin with, said Erik Wengle, a research analyst for the Urban Institute and one of the authors of the report. The state is sparsely populated, so the cost of care is high and it's difficult to spur competition in the marketplace. The lowest-priced silver plan in Alaska cost $901 a month for a 40-year-old nonsmoker in 2017, more than double the national average. The state brought premiums down more than $200 partly through a reinsurance program.
The reinsurance system in Alaska charges a tax on all health insurers, even outside the individual market. That money is pooled with federal funding to pay the claims of people with pre-existing conditions. The pool has helped bring premiums down and stabilize the marketplace, according to Cheryl Fish-Parcham of Families USA.
Although Alaska decreased premiums, it's still an expensive state, said Kathy Hempstead, senior adviser for the Robert Wood Johnson Foundation. The $698 price tage for the lowest-priced silver plan is well above the national average of $444.
Arizona also had high premiums, Wengle said. In 2017, the cheapest silver plan in the state cost $497, compared to the national average of $342. But the premium fell by $10 on the 2018 marketplace. The drop is probably just the premium stabilizing, Wengle said.
Minnesota followed Alaska by putting a reinsurance plan into effect in 2017. For those on the individual market, the plan funds 80% of the cost of claims once they hit $50,000, up to $250,000. It's funded by a tax on providers, health care premiums and federal money, according to Health Affairs. The state also has MinnesotaCare, a state-funded insurance plan for people making just above the Medicaid income limit. (We've got a state-by-state guide to Medicaid here.)
The state has struggled to control premiums in the past, but reinsurance seems to have helped, Wengle said.
North Dakota has some of the lowest premiums in the country thanks to competition between two insurers, Blue Cross Blue Shield and Sanford Health, Wengle said. The Urban Institute found insurers didn't raise premiums as much in areas where they faced significant competition.
North Dakota was also one of the few states whose insurers set prices assuming the government would keep reimbursing them for cost-sharing reductions, discounts on out-of-pocket expenses for low-income people, Hempstead said. President Donald Trump ended the payments in October. Most other states assumed the payments would end and allowed insurers to raise premiums for silver-level plans in response. Insurers in North Dakota may have suffered financially for not doing the same, Hempstead said.
What happened in other states?
Premiums for silver-level plans fell by as much as 22.5% in Alaska and rose by as much as 117.5% in Iowa. States have a lot of influence on how well their health care marketplaces worked, Hempstead said. Some states were more proactive than others in their response to the CSR cuts, which created differences in prices. States that kept short-term health insurance and other alternatives to comprehensive health insurance off the market and states that expanded Medicaid tended to fare better.
Iowa encouraged alternative health plans that drew healthy people away from the individual marketplace and made plans that complied with former President Barack Obama's health law more expensive, Hempstead said.
"There is a lot of variation in state experiences, and a lot of it has to do with state policy," Hempstead said.
What happens in 2019?
Trump wants to make it easier for people to get short-term health insurance. His administration is finalizing rules extending the duration of these plans from three months to up to a year. Once those rules are finalized, states will again have a say in how easy it is to buy short-term plans. Critics say making them more available will harm the individual marketplace.
"The question is, to what extent are people going to be lured out of the market into various kinds of short-term plans?" Hempstead said.
Hempstead predicts these plans won't be attractive for people who receive subsidies to pay for health care, but people who don't get subsidies are in play. Whether they leave the market depends largely on how states regulate short-term plans.
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