The urgency to stabilize the individual markets is palpable in the states. Insurers will begin filing preliminary rates for 2018 next month and are developing those rates in a period of uncertainty. Will cost sharing reductions continue? Will there be some help to stabilize the market, calm jittery insurers and assure that consumers in every part of the nation have available, affordable coverage? That need to stabilize the individual market seems to be gaining some bipartisan support, with considerable interest in the creation of a reinsurance plan to off- set the impact of high cost claims in that market. Key to these deliberations will be resolving how best to establish such a fund and how to assure it is adequately funded to do the job.
Before leaving for spring recess, Congress proposed a new amendment to the American Health Care Act, establishing an “invisible risk sharing program,” a reinsurance-type program intended to help stabilize markets. The amendment is similar to Maine’s ‘invisible high risk pool,’ recently featured in this blog series. Maine’s effort launched an important new approach to address market stability, but before it is adopted as a national model, some questions should be addressed.
How much of the savings were attributable to the high-risk pool and how much to benefit limits and other market factors?
The law creating Maine’s invisible high risk pool. P.L. 90, included significant regulatory changes to the individual market. Prior to P.L. 90, insurers could use a composite rating band to account for the combination of age, geography and other criteria. P.L. 90 allowed companies to rate each criteria separately – for example, age rating bands grew to a 3:1 spread, the rate allowable under the ACA. The result, as noted in the earlier blog, was some significant reductions in premiums, particularly for younger people in lower-cost parts of the state, but there were also significant increases for some older individuals and for those in higher-cost, usually rural areas of the state.
Importantly, P.L. 90 significantly changed the value of plans offered throughout the state. New plans offered fewer benefits (no maternity coverage, limited mental health and substance use services) imposed higher cost-sharing, and required separate deductibles for pharmacy costs. 
Furthermore, in transitioning to the new coverage, insurers were allowed to close current books of business –that is, richer benefit plans that had been offered could continue and individuals who chose to stay enrolled in them could do so. These “grandfathered” plans were able to increase rates for age by a 2:1 factor, less than the 3:1 allowed in the open market, and their costs were included in a separate risk pool. Insufficient analytics exist to draw clear conclusions about what impact the separation of pools had on perceived cost-savings of the program. How many individuals retained coverage in the closed plans and were they disproportionately older, sicker, or costlier than in the new plans? And given that new plans offered in the market and covered by the invisible risk pool were significantly different than those offered before the law took effect, are cost comparisons accurate? It’s tough to draw conclusions from apples to oranges comparisons.
Did the invisible high risk pool increase enrollment in the entire individual market?
The invisible high risk pool operated from July 1, 2012- December 31, 2013. Earlier reports noted that Anthem, Maine’s primary carrier, had seen significant declines in enrollment prior to enactment of P.L. 90 and enrollment increases after its implementation. During that period several external factors could have influenced rates and enrollment. First, the nation experienced the great recession that ended in 2009. Second, Maine’s Dirigo Health program operated in Maine from 2003-2013, providing subsidized insurance to individuals and employees in small business. Anthem had been Dirigo’s health insurer until 2008, when Dirigo brought new competition into the market, contracting with Harvard-Pilgrim to provide coverage and moving thousands of covered lives from Anthem to Harvard Pilgrim. In, 2012, the Governor and legislature reduced funding for the Dirigo program, effectively capping its enrollment and transitioning it over time to the ACA. Capping enrollment in Dirigo coincides with, and may be a factor in, Anthem’s reported growth in enrollment.
Is Maine’s financing structure the right model?
Maine’s invisible high risk pool was financed through a combination of premiums and assessments on insurers. Unlike high risk pools which place high-cost enrollees in a separate health plan, Maine’s plan was, indeed, largely “invisible”. Consumers were required to complete a health risk assessment, but remained in their current coverage; community rating was retained as were protections to allow coverage of pre-existing conditions. The health plans identified people who had certain high-cost conditions and prospectively ceded their claims to the invisible high risk pool. The insurer continued to pay some premiums to the pool; the pool covered 90 percent of claims between $7,500-$32,500 per year and 100 percent of claims above $32,500. But, because insurers had to prospectively identify those high-risk enrollees, the insurers were not protected from claims incurred by those enrollees who became seriously ill during the plan year. The pool had another provision that allowed health plans to instead voluntarily identify high-risk enrollees and cede their claims to the pool.
Insurers were required to continue paying premiums for lives covered by the pool; premiums covered 42 percent of claims. The remainder of costs were paid through a $4 per member per month assessment on all health insurance, including self-funded large employer plans. An additional assessment could be levied should the pool incur unexpected losses. Small employers and other insurers bore the cost of the assessment, but were ineligible for the protections provided by the pool.
Because the invisible high-risk pool only operated for 18 months, ceasing operations when the ACA was implemented, it is hard to draw conclusions about its long-term viability and financing. It certainly provided an alternative to high-risk pools that had long struggled in states and were largely ineffective and it launched an important new conversation about reinsurance. However, too many questions remain unanswered about the effect of the program to use the Maine experience to base projections for a national reinsurance plan. Were the cost savings attributed to Maine’s invisible high risk pool market-wide? How much impact can be attributed to significant benefit limits and how much to the risk pooling strategies?
Maine’s Insurance department has recently submitted legislation to authorize it to seek a waiver, like that now under review by HHS from Alaska, to create a reinsurance program. Minnesota has enacted legislation to launch its own reinsurance plan and other states may likely follow. But states’ economic conditions vary and all states are not able to commit the resources needed to reinsure the individual market. As many state legislative sessions are drawing to a close, is there time to act, even if funding were possible?
The hope of bipartisan agreement to stabilize the individual market is a promising development to states as insurers prepare to file preliminary rates for 2018. A robust, well designed, adequately financed, reinsurance fund could be an important means to that end.
 Dirigo Health Agency, Annual Report, 2008