Iowa could be the first state in the nation with no health insurance company willing to offer policies on its Affordable Care Act exchange next year unless President Donald Trump's administration approves a stopgap proposal, Iowa Insurance Commissioner Doug Ommen said Monday.
Ommen said he and officials from two major Iowa insurance carriers met last week with Centers for Medicare & Medicaid Services officials in Washington to pitch a proposal that would save the Iowa market from collapsing.
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Several counties in Missouri, Ohio and Washington state have no insurer for next year, but Iowa would be the first state to lose all insurers on an ACA exchange.
"While legislation appears to slowly be moving at the federal level, it is unlikely any changes to the ACA will be enacted in time to keep Iowa's individual health insurance market from a total collapse leaving nearly 72,000 individuals with zero options to purchase health insurance for 2018," Ommen said in the proposal to federal officials.
He is seeking a waiver from the ACA that would allow Iowa to reallocate federal subsidies currently used to lower costs for low-income and older participants. He proposes using them to entice younger people into the insurance market and using federal reinsurance dollars to help insurers absorb high-cost claims.
Ommen said thousands of young healthier people have fled the Iowa market as insurance rates increased, leaving a higher number of older, sicker people in a smaller individual market pool. That drove up costs and left insurance companies losing millions of dollars.
Minnesota-based Medica is the only company offering coverage across Iowa that hasn't announced that it will stop selling health insurance on the ACA exchange next year. Ommen said the company indicated it's likely to drop out if changes aren't made soon.
During the first week of April, Wellmark Blue Cross & Blue Shield and Aetna announced they were pulling out of the Iowa market. That followed the withdrawal of United Healthcare in April 2016 and the failure in early 2015 of an insurance cooperative CoOpportunity that had been set up by the ACA law.
"What that seems to suggest to me is that even a market that appears stable and has pretty robust competition can lose it almost overnight and that's sort of what we've seen with Iowa," said Cynthia Cox, a health insurance reform expert at Kaiser Family Foundation, non-profit organization focusing on national health issues.
In addition to those problems, Iowa, which has about 200,000 people who don't get insurance through work or other sources and buy their own policies, had more than 85,000 people keep their existing plans through Wellmark. When the ACA was created President Barack Obama promised that they could keep existing plans.
These grandfathered plans kept a large percentage of Iowa's more healthy individual market participants from joining the ACA exchange, leaving those who did join more frequent health care insurance users. As a result, Wellmark increased premiums 25 percent in 2016 and more than 42 percent for this year. Aetna's increases were around 20 percent for each of the last two years. Even with the increased premiums the carriers were still losing money, Ommen said.
The proposal will hit older and poorer people the hardest in an attempt to save the Iowa market with a standardized plan that Wellmark has committed to selling next year and Medica is considering, provided the Trump administration approves the waiver, Ommen said.
"Our proposal is to have a market versus not to have a market," Ommen said.
According to the estimates that are part of the state proposal to the government, a person aged 21-34 making between $15,000 and $18,000 a year would get a monthly credit of $336 reducing their premium to $62 a month. The same individual would have paid $34 in the current year after subsidies. A person over age 55 in the same income group would pay $136 a month after getting a premium reduction credit of $828. That person would have paid $34 after subsidies this year.
Iowa residents receive approximately $194 million in tax credit subsidies and $48 million in cost-sharing reduction payments in 2017. The cost-sharing payments, given to insurers to help customers with modest incomes cover out-of-pocket expenses like co-payments and deductibles will be diverted under stopgap plan.
In addition to Iowa and some counties in other states without an insurer, several states appear to be down to one insurer for next year including Alaska, Alabama, Oklahoma, South Carolina and Wyoming.
Blue Cross-Blue Shield plans in Alabama and Oklahoma have both indicated they intend to return, but that could change over the next few months as insurers get a better sense for their customer base and finalize their plans for next year.
Tom Murphy contributed to this story from Indianapolis.