Chris Dillmann | cdillmann@vaildaily.com
State Sen. Kerry Donovan on Wednesday was justifiably happy to help bring some long-overdue health-insurance relief to Colorado residents — especially those living in beleaguered mountain communities — when her signature reinsurance bill from last session cleared a key federal hurdle.
But the Vail Democrat knows the individual market rate relief from the federal 1322 waiver for HB 1188 could be short-lived and isn’t the long-term solution for skyrocketing premiums on the Western Slope.
For starters, the $9,000 a year in savings from the reinsurance program for the 3,000 or so people on the individual market in Eagle County — people who are self-employed or don’t get insurance through their employer — only applies to plans that comply with the Affordable Care Act.
On Colorado’s Connect for Health exchange, there’s only one ACA-compliant plan in Eagle County for 2020 (Anthem) after Kaiser announced in mid-June that it’s pulling out after just four years. Donovan also sponsored a state public option bill to create more competition, but it also requires a federal waiver and won’t kick in until 2021.
“The public option is where we’re hoping to create that competitive marketplace,” Donovan said. “This is a bill that’s trying to respond to financial crisis in people’s households, but we still have a lot of work to actually address the driving costs of health care.”
In 2019, an ACA-compliant Anthem bronze plan for a family of five cost $2,900 a month with a whopping $6,500 annual deductible before any benefits kicked in. To be eligible for substantial ACA tax credits, that family of five had to make less than $117,000 ($48,000 for individuals).
With the stripping away in 2017 of the federal individual mandate that imposed a tax penalty for people not buying health insurance, that same family of five could get a non-compliant plan with lower deductibles for around $1,500 a month, but family members could be denied for pre-existing conditions. Those rates are unlikely to be affected by the reinsurance program.
“As reinsurance is part of the 1332 state innovation waiver process of the ACA — to waive certain provisions of the ACA for certain innovations — the reductions in premiums that will occur due to the approval of Colorado’s waiver for reinsurance will only apply to the ACA-compliant individual market plans, both on and off the exchange,” said Vincent Plymell, communications manager for the Colorado Division of Insurance.
Shaky ground
Then there’s the fact that the ACA itself, which funds most of the now nine state reinsurance programs around the nation, is in serious jeopardy as a federal court of appeals weighs a Texas case challenging the constitutionality of the law — also known as Obamacare — now that Congress stripped out the individual mandate. Donovan acknowledges how shaky reinsurance may be.
“Particularly when you look at the lawsuit coming out of Texas that’s aiming to take us backwards,” Donovan said. “When you think about that competing narrative, there is very little faith on my part that we can look to the federal government right now to solve health care.”
The Trump administration has endorsed the Texas lawsuit, also joined by 18 Republican attorneys general, which could eliminate the ACA entirely, including its popular protections for people with pre-existing conditions and its provisions allowing children under 26 to stay on their parents’ insurance.
Should that happen, the $163 million in federal funding for Colorado’s reinsurance program will go away, according to the Colorado Sun, and the combined state and hospital share of $87 million won’t be nearly enough to cover the $250 million overall cost of the program in 2020.
How reinsurance works
Reinsurance is basically insurance for insurance plans, providing state funding to guarantee coverage for the riskier individuals in the plan so the costs aren’t spread to everyone.
“We thank Sen. Donovan and other lawmakers for implementing legislation that will reduce insurance premiums for local individuals and families,” said Vail Health President and CEO Will Cook. “The majority of the reinsurance program will be funded by hospitals with the intent that the savings from the program must be passed along by insurance companies to consumers.”
Donovan likewise hopes the federal approval of Colorado’s reinsurance bill is a catalyst for deductibles to start coming down.
“You certainly would hope that with more assurity and stability in the market, (insurance companies) could start to look at where they have their copay levels, because that’s just an adjustment of them trying to make their budget work with whatever goal they’re going for, but the (reinsurance) bill doesn’t directly contemplate that.”
State Rep. Julie McCluskie, D-Dillon, who sponsored reinsurance in the House, calls the federal waiver a victory for the working class in mountain resort towns.
“Reinsurance is not the long-term health care solution, but it is a significant step towards taking some of the pressure off of our working families,” McCluskie said. Now other elements of the legislature’s moves last session need to kick in, including the public option and a bill she ran with Donovan and Rep. Dylan Roberts, D-Avon, to boost health-insurance co-ops.
“By January 2020, we hope to have the Peak Health Alliance up and running, and coupled with some of the reductions we’re seeing with reinsurance, I hope that we hit even bigger reductions in health insurance premiums for our small business, large group and self-insured employers in the county,” McCluskie said, adding there’s current dialogue with Vail Health on co-ops.
Several sources said a co-op along the lines of what’s happening in Summit County is on track for Eagle County in 2021.
“Our community absolutely needs relief from increasing health care costs, and hospitals play a pivotal role in addressing this complex issue,” Vail Health’s Cook said. “In the end, it comes down to utilization and rates. Utilization is how much people are using health care, and rates refer to how much hospitals and providers charge patients and insurance companies.”