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These Republican governors are bolstering Obamacare in their states

Here's an interesting twist -- two conservative Republican governors are actually strengthening Obamacare in their st...

Posted: Jul 31, 2018 9:15 AM
Updated: Jul 31, 2018 9:15 AM

Here's an interesting twist -- two conservative Republican governors are actually strengthening Obamacare in their states.

Wisconsin Governor Scott Walker received federal approval Sunday to enact a reinsurance program, which should lower individual market premiums next year. It joins Alaska, Minnesota and Oregon in receiving such a federal waiver. And Maine Governor Paul LePage got a similar nod on Monday to reinstate that state's reinsurance program.

Both governors have been vocally opposed to the Affordable Care Act, seeking to dismantle the health reform law and refusing to expand Medicaid.

The $200 million effort in Wisconsin will use federal and state funds to protect insurers from costly Affordable Care Act claims. Walker expects premiums will be roughly 11% lower, on average, than they would have been without the program. Actual rates that people pay should decline by an average of 3.5% compared to this year, he said.

The Wisconsin Health Care Stability Plan will pay 50% of insurers' claims between $50,000 and $250,000. The state projects it will spend $34 million of its own funds for these claims next year, with the rest coming from the federal government. The feds, however, aren't expected to shell out any new money -- reinsurance also helps the federal government because the lower rates mean it will spend less on premium subsidies for those who qualify. Those savings will be redirected to the stability plan.

The Maine Guaranteed Access Reinsurance Association will cover a large share of claims from certain high-risk enrollees. The state expects premiums will be 9% lower next year than they would be without a waiver, and it predicts that the number of uninsured will fall by 1.7% because more people will be able to afford the lower rates.

The big winners, however, will be middle class residents who don't qualify for subsidies. Obamacare has grown increasingly unaffordable for them as premiums climb higher each year.

"When you have a lot of people facing unsubsidized premiums that are really high, it creates political pressure," said Linda Blumberg, institute fellow in the Urban Institute's Health Policy Center.

Several states are turning to reinsurance as a way to stabilize their Obamacare markets by curbing -- or even reversing -- premium hikes. Alaska, the first to set up such a state-based program, saw a 22% decrease in the average individual market plan this year, state officials said. Minnesota saw an average decline of 20% this year, according to Governor Mark Dayton.

Maryland and New Jersey also have reinsurance waivers pending before the Centers for Medicare & Medicaid Services. They will likely be approved in coming months, said Justin Giovannelli, associate research professor at the Center on Health Insurance Reforms at Georgetown University.

Reinsurance is one of the rare measures that enjoys bipartisan support. Reinsurance was part of the original health reform law, though it was set to expire after three years. The Trump administration, which is determined to dismantle the Affordable Care Act, has blessed it as well.

Reinsurance was also a central focus of a bipartisan Senate attempt to shore up the Affordable Care Act last year, though it ultimately fell apart over disagreements on other measures.

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