- Mississippi lawmakers created a state health insurance exchange to replace the federal Affordable Care Act exchange. Governor Reeves allowed it to become law without his signature.
Lawmakers passed legislation this year authorizing the Insurance Commissioner to establish and operate a state-based health insurance exchange under the Affordable Care Act (ACA).
Insurance Commissioner Mike Chaney (R) and the bill’s sponsors all say the legislation could result in savings for the state while potentially increasing participation by health insurance companies that would give Mississippians more options.
Gov. Tate Reeves (R) did not sign the legislation, allowing it to become law without his signature.
When the Affordable Care Act became law in 2010, it created two new initiatives aimed at reducing the number of Americans without health insurance. One allowed states for the first time to enroll able-bodied adults without dependents from Medicaid and expand eligibility up to 138 percent of the federal poverty level. Much of the energy in the chamber this legislative session was devoted to the question of whether Mississippi should expand Medicaid.
The second initiative under the ACA gave states the option of creating their own state health insurance exchange or allowing citizens to use the ACA’s federal health insurance exchange to purchase individual health insurance subsidized by the federal government.
Nineteen states operate their own exchanges separate from the federal platform. During the administration of former Gov. Phil Bryant (R), the idea of creating a state exchange was seen as an admission of Obamacare’s viability, and he rejected efforts to do so.
Implementation of the state exchange in Mississippi under the new law is unlikely until at least 2025. State officials say the federal government is expected to provide support to help set up the state-based exchange.
The Mississippi Department of Insurance has estimated the state could save between $137-196 million over five years by switching to a state-based exchange with annual operating costs estimated at $18-27 million.
According to Commissioner Chaney, under current law the state collects a tax from insurance companies that offer health insurance to Mississippians through the ACA federal exchange, and in turn, pays the federal exchange a fee. The bet is that the state can operate the exchange at a lower rate than the federal fee.
The new law was authorized by Rep. State Rep. Trey Lamar (R). The chairman of the House Ways and Means Committee said the state of Mississippi being able to keep the millions it pays the federal government now to run its own program while also seeing additional cost savings just made sense.
Lamar told the Magnolia Tribune that the Department of Insurance provided data showing that between 240,000 and 260,000 people were using the federal exchange now.
“Many of them are high deductible plans, but [many] The premiums are subsidized,” Lamar said. “That’s a big number. Having more say from the state about that exchange going forward was a good political move.”
Federal exchange participants up to 400% of the federal poverty level qualify for a full or partial subsidy to help with the cost of premiums. For example, under current law, a person earning between 100-150 percent of the Federal Poverty Level on the ACA exchange has the full cost of their insurance premium paid for them. Additionally, these individuals qualify for a 94 percent cost-sharing reduction in deductibles and out-of-pocket expenses.
Federal subsidies are made even more profitable by participating insurers. Right now, every person in this income range in Mississippi has access to $0 premiums, $0 deductibles and $0 co-pays for doctor visits and generic prescriptions, according to Jonathan Ingram of the Foundation for Government Accountability. This is effectively the result of insurers “eating” the 6 percent not covered by the federal cost-sharing reduction.
According to Commissioner Chaney and Rep. Lamar, those on the state scholarship will continue to be eligible to receive federal subsidies if they qualify based on their income level.
Initial legislation offered by Rep. Lamar was significantly amended over the course of the session before both chambers agreed on a final conference report. The main revision was that tax credits and deductions to encourage insurers to join the state exchange were removed from the measure.
Rep. Lamar said the Senate would not agree to those incentives, and as the hearing wound down, the question became whether moving to a state exchange was worth going without them.
“And the answer was yes,” said Rep. Lamar, adding that incentives may be considered in the future. “We want to rely on the federal government as little as possible is what we’re trying to say.”
State Sen. Josh Harkins (R) addressed the policy issue in his chamber. He told the Magnolia Tribune he is willing to discuss incentives, if necessary, as the process unfolds.
“Commissioner Chaney did not indicate that the tax credits were what they would bring [new health insurance providers] for the state exchange, but if that’s what we need to do at some point, we can certainly discuss it then,” Harkins said.
From what he’s been told by the Department of Insurance, Senator Harkins said potential health insurance providers may be more inclined to enter the space “simply because it’s not a federal exchange and they don’t have to deal with the feds.” .
Currently, Ambetter from Magnolia Health and Molina Marketplace are available for health insurance coverage through the federal exchange in Mississippi. Rep. Lamar also said that Commissioner Chaney has expressed that he believes more providers will come to the table when the state oversees the program.
“I can’t tell you for sure it’s going to be better, but what I do know is that we didn’t really see any downside to it as it could save the state money and potentially provide more competition in the market, which is good. for the consumer,” Lamar said.
HB 1647 also establishes the Mississippi State Health Insurance Exchange Trust Fund, which will be used to support the establishment, implementation, or operation of the state exchange overseen by the Insurance Commissioner. The Trust Fund is funded through a 3.5 percent fee assessed on the gross premiums charged on all policies sold on the exchange. This will allow the state to keep some of the funds it is currently sending to the federal government.
A Comprehensive Health Insurance Risk Association is also authorized to develop and fund an online portal that will be available to all Mississippians to assist consumers in choosing a health plan. The association will collect information about providers, drug coverage and prices for consumer review.
State Sen. Josh Harkins, chairman of the Senate Finance Committee, said Mississippi will have a good leg up in this area.
“Commissioner Chaney told us at the end of the hearing that Kentucky has offered to give us their software for free and his office will run it,” Harkins said. “This is a huge deal.”
Harkins noted that the Centers for Medicare and Medicaid Services has held up the Bluegrass State’s state exchange as the standard for how other states should operate.
Lawmakers believe the state — through the Department of Insurance — having more control over the exchange’s marketing as well as managing access points for consumers to interact and review plans would be helpful.
“I think it will be a net positive for Mississippi,” Senator Harkins said.
For his part, Commissioner Chaney has told lawmakers that his office supports providing a healthy exchange for Mississippians rather than federal efforts to simply move people receiving subsidies off the exchange and onto Medicaid.
“Bottom line, that’s why the feds want to try to take people off the market and get them on Medicaid so they can give them free money. We’re against it, I’m just going to tell you upfront, so you know where I stand,” Chaney said, as previously reported by the Magnolia Tribune. “I think it’s bad policy to take people who pay insurance and give them something for free.”
When asked if the creation of a state-based exchange had any bearing on future Medicaid expansion talks, as Rep. Both Lamar and Senator Harkins said the issues are separate.
“The health exchanges are here. The feds would have to eliminate the ACA entirely for it to go away. I don’t see that happening,” said Senator Harkins. “Whether you expand Medicaid to 138% or 100% or do nothing, the trade-off is still there. The exchange is not dependent one way or another on any conversation about Medicaid expansion.”
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