State health insurance market in flux

OLYMPIA (Feb. 1) -- Washington state’s health insurance market is increasingly volatile. While the number of people without insurance has decreased every year since 2013, monthly premium rates have spiked and only one insurer is available in some counties, according to state officials.

Prospects for consumers don’t look better in the coming months. According to data from the state Office of the Insurance Commissioner, premiums are slated to increase in 2018 by roughly 34 percent, up from a 14 percent hike in 2017 and negligible changes in 2016 and 2015.

And last summer, two health insurance companies pulled out of Washington’s individual market entirely. Grays Harbor and Klickitat counties were briefly without any insurers. This year, nine counties have only one provider, according to Insurance Commissioner Mike Kreidler.

That’s why, at a Senate Healthcare and Wellness Committee meeting in early January, Kreidler voiced serious concerns about the future of the local insurance market. “It is clear that 2019 has a distinct potential of being worse,” he said at the hearing.

In response, state lawmakers have pushed several pieces of legislation that aim to stabilize the local market. Chair of the Senate Health Care and Wellness Committee, Sen. Annette Cleveland, D–Vancouver, has two bills that would create a reinsurance program for local healthcare providers with high-cost customers and institute a mandate that local residents get health insurance.

Kreidler and other local officials have largely blamed turbulence and healthcare policy change at the federal level for last year’s price increases, insurer withdrawals, as well their grim prediction for next year.

“We were relatively stable before this year,” said Pam MacEwan, CEO of the Washington State Health Benefit Exchange at the January hearing. “The uncertainty of this past year has created a lot of volatility.”

Last spring, the Republican-controlled legislative branch of the federal government unsuccessfully attempted to repeal former President Barack Obama’s signature healthcare reform legislation, the Affordable Care Act.

In December, as part of a Republican-led overhaul of the federal tax system, the individual mandate—a key portion of the Affordable Care Act which requires that people obtain health insurance or be financially penalized—was repealed. Additionally, in October last year, the Trump administration announced that it was ending payments for cost-sharing reductions—a federal subsidy introduced by the Affordable Care Act that lowered the cost of co-pays, deductibles, and lab tests for people who were eligible.

The individual mandate was a contentious portion of the Affordable Care Act. Proponents argued that it incentivized healthier people to buy health insurance by fining them if they didn’t get covered in order to subsidize the high cost of insuring sicker people. The law, for example, requires that people with preexisting conditions be covered. Critics of the individual mandate, however, argued that it was coercive government overreach.

“This year we have some certainty of the mandate going away, we know the cost-sharing reduction funding is gone,” said Stephanie Marquis, a spokesperson for the Office of the Insurance Commissioner.

Marquis added that higher healthcare costs in rural counties have contributed to health insurance companies’ calculus to withdraw from some markets.

The first of Sen. Cleveland’s bills, SB 6084, would establish a state-level individual mandate to replace the now-repealed the federal version. As written, the legislation would exempt certain demographics, such as members of Native American tribes and undocumented immigrants.

However, the bill lacks an enforcement mechanism—unlike the now-extinct federal version which levied financial penalties on people who didn’t get health insurance—prompting concerns from the Office of the Insurance Commissioner and some healthcare providers that the mandate won’t have any tangible effect. Washington state has no income tax, unlike at the federal level, which the Affordable Care Act relies on to issue financial penalties.

To compensate, legislation would also set up a task-force to study potential enforcement mechanisms and provide recommendations to the Insurance Commissioner.

The second bill, SB 6062, which was requested by Commissioner Kreidler, would institute a state reinsurance program for healthcare providers who cover high-cost people. The legislation would take advantage of federal waivers established through the Affordable Care Act to finance the insurer reimbursements.

“I’m just trying to make sure that we don’t have a market collapse in 2019,” said Kreidler at the committee hearing in reference to his requested bill.

The two bills have already passed out of the healthcare committee and currently sit in the Senate Rules Committee, which will determine when—and if—they will get a vote on the Senate floor.

Ironically, at the same time that rates are projected to increase, the number of people without insurance is steadily declining, hitting record lows over the past three years. According to a January 2018 report from the state Office of Financial Management, the current rate of uninsured Washingtonians is just over five percent, down from 14 percent in 2013.

The report chalks the decline up to the implementation of the Affordable Care Act’s Medicaid expansion, as well as the launch of the Washington Health Benefit Exchange in 2013. “The main effect is from the expansion of Medicaid,” said Wei Yen, a research analyst at the Office of Financial Management and co-author of the report. Medicaid is state and federally funded health insurance for people with low-incomes.

Additionally, the number of people who have signed up for healthcare plans on the Washington Health Care Benefit Exchange has increased every year since 2013, with 242,000 people buying-in as of January 2018.

While the majority of Washington residents are covered by either Medicaid, Medicare, or employer-provided coverage, roughly five percent aren’t eligible for either of the federal insurance programs and aren’t covered by their employers, making them dependent on the individual market—the market that is facing severe premium increases and provider pool contractions.

“We know that the individual market is a smaller market … but it’s absolutely essential for folks who have no choice but to purchase their own coverage,” said MacEwan with the Washington Health Benefit Exchange at the January hearing. “This includes the self-employed, small businesses, part-timers, people who are in-between employment coverage and medicare coverage.”