On January 22, Governor Scott Walker announced a proposal to allocate $200 million in state and federal dollars to fund a reinsurance program in the state of Wisconsin. If approved by the federal government, this will turn out to be a good thing for CGHC members and other Wisconsinites.
What is reinsurance?
Reinsurance is essentially insurance for insurance companies. Quite simply, the Governor’s idea would pay for a corridor of the claims insurers are required to cover under the Affordable Care Act (the ACA or “Obamacare”). The proposal is similar to the 3-year reinsurance program that was in place from 2014-2016 and part of the ACA. It was successful in keeping Obamacare premiums lower than they otherwise would have been through 2016.
The Wisconsin program would reimburse health insurance companies who offer individual plans between 50% -80% of claims that cost between $50,000 and $250,000. To pay for the program, Wisconsin would put up some state dollars to capture three times as many federal dollars under another program included in the ACA that allows states to innovate on how best to provide insurance to their residents. The idea would have to be approved by federal government after Wisconsin submits a waiver application.
As an insurer, we can tell you that if the program is approved in time by the federal government, it will likely have a positive impact on health insurance premiums in 2019 for anyone that does not have access to health coverage through the government or their employer. This is particularly true for individuals who do not receive tax credits to purchase insurance.
Is there any controversy?
Governor Walker’s proposal has the support of many lawmakers, but it is not without its critics from both the right and the left. Opponents of Obamacare accuse Walker of propping up a program they would rather see repealed. Proponents of Obamacare claim Walker is making this move in an election year to pander to voters, many of whom support action to fix the health insurance market. They say a one-year commitment is not enough to stabilize the market.
The bill had enough support to pass the Wisconsin legislature despite the criticism from both sides of the political spectrum. We hope it will have the support it needs from the federal government as well, both politically and financially.
For our view on the topic continue to People Above Politics – Part 2.