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Reinsurance in Wisconsin expected to stabilize individual market

Under the Wisconsin Health Care Stability Plan, the state pays for 50 percent of the cost of claims between $50,000 and $250,000.

Susan Morse, Managing Editor

Wisconsin has received a federal waiver to leverage $200 million to implement a state-based reinsurance program to cover high-cost claims in the individual health insurance market.

Reinsurance covers a portion of the most expensive claims. The move helps to stabilize the individual market by reducing insurer claim costs and decreasing premiums.

Insurers don't have the uncertainty that a small number of high-risk individuals could dramatically increase their expenses because there aren't enough healthy consumers to balance out the risk pool.

Under the Wisconsin Health Care Stability Plan, the state pays for 50 percent of the cost of claims between $50,000 and $250,000.

The Department of Health and Human Services and the Department of the Treasury on Sunday approved the 1332 state innovation waiver under the Affordable Care Act. The five-year program starts Jan. 1, 2019 and ends Dec. 21, 2023.

The approved waiver allows the state to have access to $200 million in reinsurance funding. The federal government will pay an estimated $166 million and the state, $34 million. 

The program is budget neutral to the federal government. The money comes from savings from premium tax credits. The federal waiver allows the premium tax credits to be passed through to the state, rather than going directly to the consumer.

Consumers will see the savings in an expected 3.5 percent drop in their premiums in the individual market, starting in 2019, according to a released statement from the Centers for Medicare and Medicaid Services and Wisconsin Governor Scott Walker. This compares to a 44 percent rate hike on premiums in 2018.

Walker submitted the waiver request for the state's Health Care Stability Plan in April.

In an unrelated waiver request, Wisconsin has asked to impose work requirements as a condition of Medicaid beneficiaries receiving coverage.

While CMS Administrator Seema Verma and HHS Secretary Alex Azar have reportedly said that a judge's decision in Kentucky barring work requirements will not stop the Trump administration from considering similar waivers, Wisconsin's request awaits federal approval.

Last month, a federal judge blocked Kentucky's plan to implement a work requirement waiver. In light of the action, CMS decided to reopen Kentucky's 30-day federal public comment through August 18. 

Twitter: @SusanJMorse
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