As the country continues the implementation of the new health care law, the scene is shifting from federal to state policy and from coverage to cost. This report finds that how individual states adapt to the opportunities offered by health care reform has a major impact on the price of health insurance within their borders. The data shows there are already “winners and losers” based on the willingness of states to adopt the most effective cost reduction strategies within the new framework created by the Affordable Care Act.
Based on a comprehensive analysis of data made possible by the transparency afforded by the health care law, this report finds three state actions which substantially lower insurance premiums on the individual market. Each of these policy choices has an independent impact on insurance premiums:
➔ Accepting enhanced federal Medicaid dollars.
➔ Implementing robust health insurance rate review.
➔ An elected insurance commissioner.
Wisconsin did not accept federal Medicaid funds for their BadgerCare program. However, they did extend eligibility to those below the federal poverty line. Our report takes this into account. Additionally, Wisconsin has neither what this report considers a robust rate review program – defined as having “prior authorization” authority, nor an elected insurance commissioner. As such this report shows steps that Wisconsin could take to reduce the cost of health coverage for subsequent years.
This report is based on data from 406,884 first year qualified health plan individual market rates for the 34 states that have a federal or hybrid marketplace and have their data public. By identifying key state policies that impact how insurers priced first year premium rates, this report provides a roadmap for states policymakers seeking to constrain health insurance inflation.
❏ In states that opt to reject federal Medicaid expansion funds, first year private insurance individual market rates are on average $373.68 per year higher.
❏ States such as Wisconsin which took other steps to limit the "coverage gap" when rejecting enhanced Medicaid funds still had premiums $251.29 per year higher than states which accepted the money.
❏ States with robust rate review which includes "prior authorization" for rate increases had first year insurance rate reductions of $747.12 on the individual market.
❏ States with elected insurance commissioners experienced a $519.84 reduction in private costs per year on the individual market.