Colorado and California Take Action to Lower Obamacare Premiums | Citizens Against Government Waste
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Colorado and California Take Action to Lower Obamacare Premiums

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


A July 23, 2019 Inside Health Policy healthcare column discusses predictions made by Colorado and California state officials on the cost of their insurance premiums in 2020 due to actions they took to make the Patient Protection and Affordable Care Act (ACA), or Obamacare, more affordable.  Colorado applied for a 1332 state innovation waiver that would allow them to set up a reinsurance program using ACA funds.  California enacted an individual mandate and a new subsidy program.  Officials in both states believe their average health insurance premium will go down.

Here’s my prediction.  If the Centers for Medicare and Medicaid Services (CMS) approve Colorado’s waiver, the state will see a dramatic average premium drop; California will not.

Citizens Against Government Waste (CAGW) has been very supportive of states taking advantage of the regulatory changes made by Centers for Medicare and Medicaid Services Administrator Seema Verma to ACA Sec. 1332 state innovation waivers, which were discussed here and here in WasteWatcher.  Essentially, the waiver allows states to come up with creative ideas, such as Colorado has done, to stabilize their individual insurance markets and bring down premiums.  There are certain guidelines the states must follow, such as their proposal cannot add to the nation’s debt or the state must provide coverage that is at least as comprehensive as would be provided absent the waiver.

Doug Badger, a visiting fellow, and Edmund Haislmaier, a senior research fellow, at the Heritage Foundation, discussed in their September 2018 report, “State Innovation:  The Key to Affordable Health Care Coverage Choices,” the changes states were taking to improve insurance market conditions. Other states have begun to take notice the success 1332 waivers are having in lowering premium costs.  Where the waiver works best is when it is used to create risk mitigation.  States use some of the ACA funding, as well as state funds, to create a risk pool for people with pre-existing conditions.  Not only does this process reduce premiums, it protects those with very high medical bills.

Meanwhile, California decided to take the hammer approach and reinstituted the individual mandate.  The state will also provide premium subsidies to people earning up to 600 percent of the federal poverty level, instead of the 400 percent provided in ACA.  And it does not appear to be budget neutral, like the Sec. 1332 waiver.  Those income amounts are about $75,000 and $50,000, respectively.  As the old saying goes, subsidize something and you get more of it.  I am predicting California’s premiums will go up.

Inside Health Policy notes other states are going the 1332 waiver route, Delaware, Rhode Island, and South Dakota.  They also want to create reinsurance programs using ACA funds.  This is more good news and if CMS approves their waivers, these states will also see their average premium go down.

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