Montana could be the next state to implement a reinsurance program in an effort to drive down exchange premiums.
On Wednesday, Governor Steve Bullock announced the creation of a bipartisan work group that will design a bill ordering the state to submit a §1332 wavier that would form a public program. It will also consider what that waiver, and the resulting program, should entail.
Reinsurance could lower premiums as much as 20% in Montana, according to a recent report (PDF) from the Montana Healthcare Foundation.
Maryland has become the bellwether for reinsurance success. Shortly after Montana's governor dispatched the work group, Maryland Gov. Larry Hogan said premiums on the state exchange will decrease by 13.2% in 2019 due to the state’s reinsurance program.
Before Maryland implemented its program, insurers had requested rate increases ranging from 18.5% to 91.4%. In that case, many of the 190,000 Marylanders that receive coverage through the individual market likely would have discontinued their coverage.
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Montana has made significant strides in reducing its uninsured rate. In 2013, one in five Montanans lacked coverage, the Montana Healthcare Foundation says (PDF). By 2016, the uninsured rate had dropped to 7.4%, rising slightly in 2018 to 7.8%.
Recent federal policies are expected to raise premiums in Montana by $1,300 on average, the governor’s announcement said. Bullock said the state must act now to curb costs and stabilize the marketplace due to these policy changes.
"Reinsurance for Montana could be a game-changer in the battle against rising healthcare costs," said Department of Administration Director John Lewis in a statement. Both Lewis and Bullock cited federal actions to destabilize the marketplace, including "expanding short-term junk plans, refusing to make cost-sharing reduction payments" and cutting off enrollment funds to Montana and two other states.
This wouldn’t be Montana’s first time at the reinsurance rodeo. Bullock vetoed a reinsurance bill in Montana in 2017 because it would have given the state insurance commissioner too much power, Montana Public Radio reported.
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However, he encouraged Congress to provide funding for reinsurance programs when testifying with a group of governors before the Senate Health, Education, Labor, and Pensions Committee about stabilizing the individual market.
There is reason to believe the Centers for Medicare and Medicaid Services (CMS) would allow Montana to create the program. It approved a string of §1332 waivers for reinsurance programs toward the end of last summer, giving Wisconsin, Maine, New Jersey and Maryland the green light within a month of each other.
Alaska, Minnesota and Oregon also have reinsurance programs.