So how would this reinsurance thing work in Wisconsin anyway?

Over the weekend, the Walker Administration got good news from their allies in the Trump Administration, as the GOPs in DC signed off the Wisconsin plan to try to reduce premiums for Wisconsinites who receive their health insurance through the Obamacare exchanges.

Thanks to a federal waiver from the Affordable Care Act, the state will use $200 million in state and federal funds to cover some insurer costs.

The federal waiver was approved by the Legislature in February and then approved by the federal government. It will create a reinsurance program for people on the individual market and will cover some insurer costs.

"We just wanted to fix as much as we could. The problems that people face today and so presumably five years from now, there will probably be some changes we can adapt to, but in the meantime we want to give people meaningful relief so that premiums will go down," Walker said.

The idea is that the $200 million to the insurers would (hopefully) not have them put insurance premiums be as high as they otherwise would be, and much of that would be paid back by the Feds (I’ll explain that “Fed vs State” cost breakdown later).

When the bill was being debated in February, the Legislative Fiscal Bureau gave this summary of the reinsurance plan, and explained that this would replace the ACA’s original nationwide program that was done away with in 2016.

The ACA's transitional reinsurance program paid a portion of the medical costs (called the "coinsurance rate") above a certain threshold (an "attachment point") up to a maximum threshold (the "reinsurance cap"). DHHS was required to set the program parameters such that the total amount of estimated reinsurance payments would equal the amount of funding available for that purpose each year. The amount of funding available for reinsurance payments nationwide was set by the ACA at $10 billion in 2014, $6 billion in 2015, and $4 billion in 2016. This program was primarily externally funded, since the funding for making the reinsurance payments was collected using per capita assessments of all health coverage plans, including fully-insured and self-insured employer plans in the individual, small group, and large group market.…

The transitional reinsurance program under the ACA had the effect of reducing a participating insurer's risk exposure associated with high-cost individuals. But the program's externally-funded structure also had the effect of reducing the share of total costs paid by insurers and by individuals covered in the individual market. That is, a portion of the medical costs of high-cost persons in the individual market was, in effect, spread across the entire insurance market. Because the ACA's transitional reinsurance program was temporary, all costs associated with high-cost individuals within the individual market must now be funded internally within that market, through premiums paid by persons in the individual market. Current gross premiums in the individual market have increased in 2017 and 2018 in part because of the end of the external subsidy effect of the transitional reinsurance program.

So how does the waiver interact with the ACA? Here’s how the LFB explained it.

Section 1332 of the ACA includes a provision allowing states to experiment with alternative methods of providing for healthcare coverage. Under Section 1332, states may request a waiver of various insurance market provisions established by the ACA, and also request pass-through federal funds that would otherwise be spent for premium tax credits. In order to be approved, state proposals must not increase the federal deficit, must provide coverage that is at least as comprehensive and as affordable as plans offered through the exchange, and must provide coverage to at least a comparable number of state residents. States are required to pass a law implementing provisions of a waiver plan.

In addition to the Wisconsin proposal, other states have already or are considering the possibility of establishing a state reinsurance program to lower premiums and encourage insurer participation in the individual market. So far, Alaska, Minnesota, and Oregon have established programs under a Section 1332 waiver. Of these three, Minnesota's program is most similar to the Wisconsin proposal, with parameters that are also similar to the first year of the ACA's transitional reinsurance program. In 2018, the Minnesota reinsurance program uses an attachment point of $50,000, a reinsurance cap of $250,000, and a 80% coinsurance rate. In addition to federal pass-through funds, Minnesota designates state funding sources for the program, including proceeds of a health insurance premium assessment.

Basically, the Feds give the state a portion of the money they would otherwise have given to individuals for tax credits that help people buy insurance on the ACA exchanges, as a “thank you” for having the premium increases not be so high (and therefore, the federal government's subsidy isn’t so high).

Oddly, there is little change to the net cost of many people that make up to 400% of poverty for insurance they buy on the Obamacare exchanges, because they’d get that money paid back through subsidies anyway. It’s just less to pay up front with the tax credit being smaller (in theory). The biggest beneficiaries are contractors and others who make too much money to qualify for the subsidies, and now hopefully get their premiums lowered as a result of this reinsurance plan.

Of course, Citizen Action's Robert Kraig notes that there was a better way for Walker to reduce premium costs and would cover more people. If Scotty had just CHOSEN TO GO ALONG WITH THE ACA FROM DAY ONE, and put in other public insurance options for Wisconsinites would save more money than whatever people might save in premiums with the reinsurance plan.

1. Opening BadgerCare to everyone in Wisconsin as a public option would reduce premiums and deductibles by an average of 38%. It would also help people who buy insurance on their own and small businesses, most of whom cannot afford to provide coverage to their employees.

2. Reversing Walker’s decision to turn down the Medicaid expansion money in the ACA could reduce premiums by about 7%.

3. Reversing the Walker Administration's decision in May to continue to allow the sale of substandard “lemon” plans in Wisconsin could reduce premiums by as much as 10%.

In addition, although Walker has decided to tout what he is doing to stabilize the ACA, he approved the filing of a lawsuit by the Wisconsin Attorney General that would strike down the law, taking health care away to nearly 200,000 Wisconsinites.

Instead of acting like a governor and doing the right thing for his constituents, Scott Walker chose to impress the Kochs and other right-wing oligarchs, and messed with the ACA in Wisconsin once he took office in 2011 (he was also seen sticking it to the Black Man in the White House. Win-win!). Now that Walker is trailing the Democratic competition for re-election, with Wisconsin falling from 7th to 15th for having its residents have health insurance, and with the specter of new ACA prices rolling out right before the November election, he knew he had to be seen doing something.

So we have this reinsurance plan. Hey, maybe it will help for a year, and maybe we won't have 2.1% of our population lose health insurance this year. But we deserve a lot more than this one-time Band-Aid that is being putting out to try to cover the wounds caused by Republicans like Scott Walker and their willful sabotage of the Affordable Care Act.