As the Wisconsin Joint Finance Committee is in executive session today to decide on, among others, the budget for the Walker Administration's Office of Commissioner of Insurance (OCI), we thought it was appropriate the point out a piece from our research Minnesota vs Wisconsin 2015 Heath Cost Report showing one area where the OCI has influenced the cost of healthcare: their allowing of substandard insurance plans that can't pass muster and aren't normally allowed by the Affordable Care Act.
We will continue to share blog posts on major areas of healthcare, including reducing costs and policy options before us. In the meantime we welcome you to check out our latest report.
When the Affordable Care Act was passed, the law stated that inferior, substandard, minimal benefit insurance plans were to no longer be allowed to pass muster. If you had a plan like this you could keep it, if you wanted and didn't want to choose from better options newly available, but new substandard plans were not to be allowed to be sold.
Since the launch of Healthcare.gov, the U.S. Department of Health & Human Services has permitted states the option to allow companies to sell insurance plans that are not Affordable Care Act compliant for a limited time. The selling of these substandard plans, as opposed to “grandfathered” plans which were already sold prior to 2014, is allowed until 2017. An option that Wisconsin's OCI chose and Minnesota rejected.
The decision to extend the sale of substandard non-ACA compliant plans impacts the cost of healthcare. Prior to the Affordable Care Act the insured individual market population was healthier and lower cost than the general population, because discrimination against people with health conditions was legal. Because Wisconsin decided to allow these plans this healthier population was removed from the risk pools for those signing up for marketplace plans.
This maneuver increases insurance industry profits at the expense of health care consumes, and extends the legacy of discrimination. By excluding healthy consumers from the individual and small group marketplace the risk pools of marketplace plans has increased, increasing rates. A RAND Corporation report concludes that allowing the sale on non-ACA compliant plans increases marketplace plan costs by close to 10%. In addition, as non-ACA compliant plans are not subject to Affordable Care Act protections such as Risk Adjustment and Risk Corridor, which works to share risk and reduce costs, Wisconsin’s decision to allow continued sale of non-ACA compliant plans brings greater cost and instability to the insurance market.
This sale of substandard plans is also dangerous for those who may get lower premiums in the short term. In addition to its impact on cost, allowing the sale of substandard plan will leave many health consumers facing large unexpected costs if they experience a major illness or injury, as the plans are designed to shift more cost onto consumers when they are actually used. This will lead to completely preventable personal bankruptcies, as medical bills are the leading cause of bankruptcy.
For this reason and more we encourage Wisconsin's Office of the Commissioner of Insurance to cease the continued sale of substandard non-Affordable Care Act-compliant health insurance plans, they impact those just seeking to make the responsible and safe decision of getting private health insurance that will be there for all needs no matter what and cannot be taken away.
To see more ways that Wisconsin could look into to reduce the huge cost disparity in health insurance between Wisconsin and Minnesota, read more here.