Governor Scott Walker's reinsurance plan wins support from insurers, others

MADISON — Gov. Scott Walker's $200 million plan to reduce health care costs for people purchasing insurance through the private marketplace won support from Wisconsin's health insurance providers, doctors and medical community at a public hearing Monday, even as Democrats raised concerns about its sustainability.

The reinsurance proposal is part of a package that Walker, who faces re-election in November, put forward designed to stabilize the state's private health insurance market. Walker argues his proposals, including a state protection for people with pre-existing conditions, are needed because Washington has failed to act on passing a replacement for the Affordable Care Act, also known as "Obamacare."

The budget-writing Joint Finance Committee planned to vote on the measure Tuesday, a day after the hearing, as lawmakers push to complete their work for the year next month.

The bill would authorize the state to seek a federal waiver to offer a reinsurance program to lower premium costs. Under such a program, the government would provide money to health insurance providers to pay for between 50 percent and 80 percent of medical claims costing between $50,000 and $200,000.

If Wisconsin moves ahead with reinsurance it would join Minnesota, Oregon and Alaska with such programs. Rates are at least 20 percent lower this year in Alaska and Minnesota, thanks to the program, representatives of the health insurance industry told the committee. In Oregon, rates are about 7 percent lower thanks to reinsurance, the committee was told.

Horizon Government Affairs estimated rates in Wisconsin would drop 13 percent in 2019 and 12 percent in 2020 if the program is in place.

Walker estimated his plan would cost $200 million, with the state picking up $50 million and the federal government paying the rest. The state's share would come from savings from the Medicaid program.

Democratic Rep. Katrina Shankland, a member of the budget committee, said she was concerned about the state getting as much money from the federal government to pay for the program as Walker assumed. The Wisconsin Hospital Association also urged finding permanent funding instead of relying on unspecified Medicaid savings.

Republican Senate Majority Leader Scott Fitzgerald last week said senators are considering allowing for reinsurance temporarily, but putting an unspecified end date on the program.

The proposal won backing Monday from the health insurance industry, including the Wisconsin Association of Health Plans, which speaks for 12 community-based health plans in the state. The Wisconsin Medical Society, the Wisconsin Hospital Association, the Marshfield Clinic Health System and the American Lung Association in Wisconsin are all supportive.

Citizen Action Wisconsin, an advocacy group that supports universal health care, raised concerns.

The proposal does not guarantee that the insurance companies receiving money from the state will pass on any savings to consumers, said Kevin Kane, a health care specialist with the group. At its best, the program would slightly reduce premiums for only a small percentage of people who buy insurance through the marketplace but don't receive tax subsidies, Kane said. It will also do nothing to affect deductibles and co-pays, he said.

Walker has said the move would stabilize a market that recently lost several larger insurers including UnitedHealth and Anthem Blue Cross Blue Shield. The state insurance office estimated that premium rates will increase an average of 36 percent this year.

Because of the loss of insurers, this year more than 75,000 people in Wisconsin had to change insurance companies and many of them were limited to one or two choices.

About 200,000 people in Wisconsin buy insurance through the private marketplace created under the federal law. If reinsurance were in place, Horizon estimated that about 9,600 more people would buy insurance the first year and more than 22,000 the second.

Another Walker proposal before the committee Monday would spend $50 million a year on rural economic development projects designed to stimulate private investment, improve productivity and fill open jobs in rural parts of the state.

Eligible projects would have to be in counties with a population density of less than 155 people per square mile. Fifty-six of the state's 72 counties would meet that criteria.