CMS approves Wisconsin's waiver to stabilize ACA exchange with $200M reinsurance program

Wisconsin Gov. Scott Walker, a staunch opponent of the ACA, says a newly approved reinsurance program will reduce exchange premiums by 3.5% next year. (Gage Skidmore/CC BY-SA 2.0)

The Centers for Medicare & Medicaid Services approved a waiver request from Wisconsin on Sunday to create a $200 million reinsurance program designed to lower exchange premiums across the state. 

The approval marks the first time this year that the Trump administration has approved a state innovation waiver under Section 1332 of the Affordable Care Act (ACA). The provision allows states to implement innovative strategies to provide residents with access to health insurance within the basic parameters of the ACA. 

With its approval (PDF) from CMS, Wisconsin will create a 10-year program that reimburses insurers as much as much as $200 million annually for high-cost patients. Under Wisconsin's Health Care Stability Plan, signed into law by Gov. Scott Walker earlier this year, the state would provide coverage for claims between $50,000 and $250,000, with the state picking up 50% of the tab. 

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The plan is expected to lower average premiums by 3.5% compared to 2018 rates, representing an 11% cut if the waiver wasn't approved. State officials predict enrollment will increase by 1% as a result of lower premiums. 

“People in the individual market saw their premiums go up by 44% on average last year, and some saw much larger increases—that’s unsustainable and unacceptable,” Governor Walker said in a statement. “Thankfully, the federal government is giving us the flexibility to implement a Wisconsin-based solution to help stabilize premiums."

While the reinsurance program includes $200 million in funding, a large portion of that will come from the federal government in the form of "pass-through savings." An analysis (PDF) conducted by Wakely on behalf of the state determined that the federal government would save $166 million from lower premium subsidies, which would be used to fund the program beginning in 2019. The remaining $34 million would come from the state. 

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By assisting insurers with high-cost enrollees, the state expects more insurers to enter the marketplace after payer exits left many portions of the state with just one or two options. 

It's a curious move by Walker, who has been one of the ACA's staunchest opponents. Wisconsin is one of 20 states suing to eliminate the ACA entirely.

Walker appeared to straddle that line on Sunday, tweeting that "Obamacare is collapsing" but emphasizing the need to stabilize the exchange to improve access to coverage. 

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