In Louisiana, as in many states across the U.S., the individual health insurance marketplace is in rough shape. Between skyrocketing premiums and a dwindling number of insurers—from 16 in 2014 down to two now—the state of things is getting dire. And because uncertainty continues to hover over the health insurance landscape in general, thanks to discontinuation of cost-sharing payments to insurers and a repeal of the individual mandate, costs may continue to go up. As a solution, the Louisiana Department of Insurance has proposed a reinsurance program that they say would help the individual market turn the corner.
If passed, The Advocate outlined, the bill (House Bill 472) would impose a $1.25-per-month fee on each health-insured life in Louisiana. The money generated—$20 million—would then go into a reinsurance pool, which would be used to help insurers cover the costs of expensive claims. These funds would essentially insure Blue Cross and Blue Shield of Louisiana and Vantage Health Plan against patients whose healthcare costs are more than $45,000, with a cap of $250,000. Meanwhile, since the federal government would not be distributing as much money in tax credits to offset these high patient costs, that savings (roughly $104.3 million) would go into the reinsurance pool as well. If the programs works, proponents say that more insurers could return to the market and premiums could start to drop.
This idea has been used in the past. At the federal level, a similar program was used under the Affordable Care Act, but expired in 2016, and a handful of other states have tried it as well. Department of Insurance officials say that these other state programs showed promising signs, including a 20 percent drop in premiums in Alaska.
However, at the end of the day, someone has to pay for this new program, NFIB/LA State Director Dawn Starns told The Advocate, and it will amount to another hit to the cost of healthcare.
NFIB was instrumental in getting the federal health insurance tax suspended; now that states are trying to push the idea again, it will only make things worse for small business owners, who already cannot afford coverage. If you haven’t already, take the opportunity to respond to the NFIB/LA member alert and tell your representatives how House Bill 472 would impact you, your business, and your employees.