Trusting Health Care To Your State Could Prove A Disaster

By Peter Rosenstein - May 15, 2017 12:00 am

The truth is your state can often make or break the insurance marketplace, which impacts whether you can afford health insurance. The health insurance marketplaces authorized by the Affordable Care Act (ACA) are in real trouble in some areas of the country. Over the next 12 weeks you will learn if and how much insurers will be raising premium rates in your state. In some states there may be only one or even no insurers that will sell policies on the marketplace. While Republicans want to blame the federal government for this situation, the real story of why some marketplaces are working and some are failing resides primarily at the state level.

Your state government has a significant role in the delivery and financing of health care. States regulate health care providers and the state’s insurance markets with some exceptions related to the self-insured and Medicare Advantage markets. Your state runs Medicaid and the Children’s Health Insurance Program (CHIP) for lower-income individuals, and they finance the care of state employees.

So your state can actually make or break its individual market, including the ACA health insurance marketplace, depending on how they decide to handle a number of issues. These would include whether the state has accepted the chance to expand Medicaid as allowed under the ACA; whether it has allowed non-ACA compliant health plans to continue to be sold; whether it adequately staffs its departments of insurance and health with knowledgeable people; and whether the state actively promotes health care coverage enrollment to its citizens. In every case where there is the potential for the marketplace to fail, the state government has made poor decisions.

One example would be Tennessee. Over the past several weeks there were rumblings that Tennessee would become one of the first health insurance marketplace “deserts” in 2018. A marketplace desert being one where no plan is offered. While it appears that BlueCross BlueShield of Tennessee is going to fill the gaps for 2018, it is important to understand why the marketplace was on the verge of collapse. If the underlying problems are not addressed, it’s likely that the same risks will reemerge in 2019. We need only look at decisions made by Tennessee’s state government. First the state has not expanded Medicaid. This means more lower-income, higher-risk individuals end up in the individual market as opposed to the Medicaid program. Then Tennessee allows the Farm Bureau Health Plans to siphon off 175,000 of the healthiest individuals from the individual market by selling non-ACA compliant health insurance policies. These plans attract healthier, wealthier individuals who do not believe they need the more robust ACA coverage and are capable of paying the full cost of the insurance upfront without federal assistance via the ACA tax credits or cost-sharing reductions. This is possible because the state allowed the Farm Bureau to skirt federal insurance market rules by deeming the organization a “not-for-profit membership services organization” as opposed to what they really are which is an insurer. These two decisions alone are a double-whammy on the marketplace’s risk pool: more high-risk enrollees are coming into the marketplace because they can’t enroll in Medicaid, while the lower-risk, higher income individuals get to opt out. What that means is essentially, the state’s marketplace is a de-facto high-risk pool requiring high premiums to prevent the insurers from suffering unsustainable losses and pulling out. If you live in Tennessee you should know that under the current ACA your state legislature and governor can fix this.

The president and Republicans in Congress are singing from the same hymnal. All you hear from them is the simplistic refrain that states are the perfect laboratories to test different approaches to solving problems. Another ubiquitous saying they like to use is “health care is local.” If you believe those two things you could agree with them it would be logical to provide states with flexibility to tailor health care solutions to meet local needs.

The reality is very different. Your health care isn’t local but rather it is personal. Each of us is entitled to have the best possible care for the best possible rates. Instead of looking for the best practices if your state’s marketplace is failing what your state legislature and governor have most likely done is to look for the cheapest way out for them rather than the best way to provide health care to you. What you want them to do is look to other states with marketplaces that are working and adopt the approaches that others have tested and are working.

No one is saying the ACA is perfect and everyone agrees it needs some fixes. But those fixes aren’t turning over everything to states and cutting Medicaid by over eight hundred billion dollars. That won’t get you better health care and in fact it might get you even higher premiums and less services, if you can even get someone to insure you. The bill the House of Representatives passed to repeal the ACA and turning decisions on your health care coverage to your state will make things worse, not better, for you and your family. You need to tell that to your United States senator before they approve the same bill and allow it to become law.

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