Michigan Association of Health Plans

Michigan to study ways to lower health insurance premiums

Originally published by Crain’s Detroit Business


Michigan is looking for a contractor to conduct a health insurance market study as part of the state’s overall effort to lower health insurance premiums.

The study also could help the state insurance department decide whether to seek a federal innovation waiver that would give it additional regulatory authority, state health insurance officials said.

“The goal is to study options that could have a meaningful impact on reducing health insurance premiums for Michigan consumers while ensuring coverage is comprehensive and accessible,” Patrick McPharlin, director of the state Department of Insurance and Financial Services, said in a statement

The contractor submitting the request for proposal must have policy, economic and actuarial expertise to help the state stabilize the health insurance market and lower insurance costs, DIFS said. RFP deadline is Nov. 7.”Michigan Association of Health Plans and its health plan members are pleased to see the Michigan Department of Insurance and Financial Services’ request for proposal for a health insurance market study,” MAHP executive director Dominick Pallone, said in a statement. “We have strongly advocated such a step for some time.”

Based on the experience of other states, Pallone said he believes the study will help control health insurance costs while improving quality and accessibility for Michigan residents.

DIFS said the study “will inform Michigan’s decision regarding pursuit of a Section 1332 State Innovation Waiver under the Affordable Care Act.” There are several policy options DIFS could pursue, including providing a reinsurance program or a high-risk pool for people with costly medical conditions. The study would present policy options for the state.

The three-phase study would include the market study and policy options and an analysis of DIFS’ chosen option. The final phase would only be completed if the state Legislature enacts enabling legislation and appropriates funds for the program.

Jeff Romback, MAHP’s deputy director, said one option for a reinsurance pool would be once an insured policyholder hits a specified dollar claim amount, the reinsurance pool would kick in the pay for that claim. A high-risk pool could be similar, where patients with certain diagnosis or high-cost conditions would be separated out and their care managed more closely by providers.

Romback said MAHP has estimated that about 5 percent of the individual market accounts for about 25 percent of the total costs. Based on experience in other states, Michigan could save with a reinsurance or high-risk pool about 10 percent on average premiums, he said.

Late summer, DIFS asked health insurance executives for ideas to help stabilize the health insurance market.

Part of the state’s fiscal 2019 budget included funds to conduct an actuarial study that could support Michigan’s pursuit of an Obamacare-type state innovation waiver. Section 1332 waivers relax regulations to allow states to try innovative methods to lower health insurance costs.

“While the most common waiver sought has been for some form of a reinsurance program, there are other programs states could pursue,” McPharlin said. “I am asking these insurers to submit their recommendations on a potential reinsurance program, and any other waiver ideas they think DIFS should study.”

For example, the U.S. Department of Health and Human Services and the Treasury Department recently approved a Section 1332 waiver for New Jersey to implement a five-year reinsurance program for its individual health insurance market beginning in 2019. New Jersey officials project the program — creating a high-risk pool to manage people with costly medical conditions — could lower overall premiums by 15 percent in 2019 and increase enrollment in its individual market.

Ideally, a Michigan waiver could provide “health coverage that is at least as comprehensive and affordable, cover at least as many residents, and not increase the federal deficit,” DIFS said.

While Michigan legislators would make the final decision on how the state would fund a reinsurance or high-risk pool, states like Wisconsin, Alaska and New Jersey fund their state pools with either general fund dollars or health insurance company taxes.

Read the full story at Crain’s Detroit Business