Iowa health insurance market stable, but still broken

by Travis Fischer

Those that liked their health insurance will get to keep it for at least another year as the Centers for Medicare and Medicaid Services have approved the extension of transitional policies in Iowa through 2020.

Transitional plans and plans that were grandfathered in following the passage of the Affordable Care Act continue to be utilized by over 82,000 Iowans and while the continued renewal of these plans has been uncontroversial, their sustainability is not guaranteed. By definition, these grandfathered insurance plans are inaccessible to anybody that does not already have them. As time goes on, the pool of people on these plans will naturally decrease, eventually forcing premiums to rise and making them unaffordable for those that remain.

Though it hasn’t happened yet, this will leave few good alternatives for people seeking coverage elsewhere. Those that don’t have employer based coverage may have to turn to the individual marketplace, where premiums can be double of what the grandfathered plans are today, or simply go without insurance at all.

“I think they view that as long as you’re seeing these crazy high prices in the ACA market it seems like a pretty simple decision,” says Iowa Insurance Division (IID) Commissioner Doug Ommen. “I’m confident that if you try putting them into the ACA market, they’re going to leave the individual market entirely.”

Since activation of the Affordable Care Act’s major provisions in 2014 the law has been successful in expanding health coverage to low income Iowans, particularly through expanding Medicaid to 144,000 more people and providing subsidized coverage to people that make up to 400 percent of the poverty line.

While this brought in a large number of Iowans that had been previously unable to afford health insurance, particularly when insurers were able to deny coverage due to pre-existing conditions, insurers dramatically underestimated the number of high cost individuals that the new law would have them cover.

This resulted in spiking premium prices, particularly for people that did not qualify for subsidized coverage, causing a downward spiral for the market where an exodus of people triggered an increase in premiums, which would subsequently trigger another exodus of people.

In 2017 the individual market faced a crisis as this death spiral caused insurers like Wellmark and Aetna to drop out of the marketplace all together. For several weeks it appeared that Iowa may not have any option for individual insurance in 2018, however Medica decided to stay in, though they implemented a 43.5 percent increase in their premiums to do so.

Since then the market has bounced back with Wellmark returning, leaving Iowa with two options for individual insurance in 2019 and forward.

“It has reached a new stability that is heavily made up of people who are able to access advanced premium tax credits in order to avoid experiencing the costs of those high rates,” said Ommen.

Tax credits provided by the ACA keep lower income Iowans from feeling the sting of increasing premiums by capping the amount of money they are required to pay

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