Future of Health Reform: A prescription for individual market stability

By Laura Kaslow, Blue Cross Blue Shield of Minnesota

In Minnesota, and across the country, markets for individual health insurance products are under enormous financial stress. National health reform policy expert Sabrina Corlette, a research professor at Georgetown University, addressed this uncertainty at a recent  Blue Cross-sponsored event at the University of Minnesota  Humphrey School for Public Affairs.

We caught up with Corlette following the presentation to get her thoughts on what needs to come next for stabilizing the individual market. Corlette outlined the following challenges and opportunities she sees within the current marketplace.

Three threats facing the individual market

An underlying sense of uncertainty about short and long-term stability is driving three marketplace threats. Corlette says that these threats include:

  1. An uncertainty that the cost sharing reduction subsidies (CSRs), which reduce out of pocket expenses for eligible enrollees, will be honored.Corlette says that a loss of subsidies could be a factor in significant premium increases for those who purchase insurance on their own.
  2. The potential lack of IRS enforcement of the individual mandate, an additional tax that must be paid for not having health insurance. Without an individual mandate, people could wait until they are sick to purchase coverage, leading to increased premiums for everyone.“No enforcement could also lead to more insurance carriers choosing to exit the market altogether,” she said.The need for short term stability brought forward by the individual mandate was pointed out as a Blue Cross priority in this blog post.
  3. Existing and future budget cuts that reduce consumer awareness about their options. Starting this year, in other states*, there will be a shorter open enrollment period to buy an individual health plan. Additionally, promotional resources— including those for outreach to underserved communities— have had funds cut.Corlette emphasized that “these resources are critical so that people who purchase insurance on their own can understand their options.”

*Editor’s note: MNsure recently extended the open enrollment period for those shopping on the state health care exchange in Minnesota.

Six market stabilization recommendations

In face of these challenges, Corlette offers six recommendations to stabilize the marketplace.

  1. The government should keep its commitment to pay cost sharing reductions (CSRs) to help make health insurance more affordable for the individuals who need it.
  2. The individual mandate needs to be enforced. This will ensure a healthier risk pool and lead to greater premium stability.
  3. There must be a robust marketing outreach effort to enroll the remaining uninsured. This will ensure that they know their options— including eligibility for financial assistance.
  4. The reinsurance program— funds that help health insurance carrier offset unusually expensive claims and keep premiums more stable— should remain. There is good policy reasoning for this program. The importance of the reinsurance program, and how it impacts Blue Cross’ 2018 rate filings was highlighted in this blog post.  
  5. There need to be strong incentives— like regulatory relief or tax relief— to keep insurers in rural areas.
  6. The “family glitch” needs to be fixed. Currently, if someone gets health benefits from their work only for themselves and not for the entire family, that family’s additional plan would not eligible for tax subsidies. This can lead to health insurance for the remainder of the family being unaffordable.

Minnesota seen as a national leader in health reform efforts

Corlette said she believes policy and health insurance leaders in Minnesota have an important voice in what needs to come next in the work to stabilize the individual market.

“Minnesota has been at the forefront of health reform efforts,” Corlette said. “A number of states are looking at what Minnesota is doing, and more will continue to do so.”

Editor’s Note: This post originally appeared on Blue Cross Blue Shield of Minnesota’s Blog.

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