Iowa Submits Proposal to Counteract Soaring Individual Healthcare Premiums

August 22, 2017 | Kristine A. Tidgren

Update: On October 23, 2017, Iowa withdrew its proposal for a stopgap measure.

Earlier this month, we updated you on the crisis facing the Iowa individual healthcare insurance market and Iowa's proposal to keep the market afloat. The August 7 blogpost provides a detailed review of the Iowa Stopgap Measure designed to restructure the Iowa individual market. On August 21, 2017, Iowa submitted its formal Waiver Application to the U.S. Treasury Department and the U.S. Department of Health and Human Services to implement the Iowa Stopgap Measure in 2018. It is now up to those agencies to grant or deny the request. Since the August 7 blogpost was written, several facts have changed, making the picture even more grim.

Medica, the only remaining insurer in the Iowa ACA-compliant individual market, has now requested a 56.7% increase in individual insurance premiums.

An actuarial review of the Medica rate proposal (conducted by NovaRest) estimates:

  • 18,000-22,000 Iowans without subsidies (those with incomes greater than 400% of the federal poverty limit) will leave the insurance market in 2018 due to unaffordable rates.
  • Another 28,000 to 30,000 Iowans currently on transitional plans are at risk of becoming uninsured in 2019.

For example, under the new rate forecast and analysis, a farm couple, aged 55, earning $67,000 a year could face insurance premiums of $32,700 in 2018. A 63-year-old couple earning $67,000 per year, could face premiums of $39,000 per year.

A 28-year-old couple with four-year-old twins earning $101,000 per year could see premiums of $27,000 in 2018. If they earned just $3,000 less per year, they would be eligible for an unlimited subsidy and would likely pay $9,511 per year for the same coverage. The federal subsidy would cover the additional cost.

And these are just premium costs. The estimates do not take into accound out of pocket copays and deductibles.

Read the August 7 blogpost for a more detailed summary of the Iowa proposal to reverse this premium spiral. In a nutshell, the plan proposes the following:

  • A single, standard plan available to every eligible Iowa consumer from each participating carrier,
  • Flat, per-member, per-month premium credits based on age and income, and
  • A reinsurance program to support high-cost claimaints.

If the stopgap measure is approved, Wellmark has agreed to participate. The Iowa Insurance Division hopes that other carriers will return as well.

We'll be watching for the response from the federal agencies.