- Mississippi lawmakers created a state health insurance exchange to replace the Affordable Care Act’s federal exchange. Governor Reeves allowed it to become law without his signature.
Lawmakers passed legislation this year that authorizes the Commissioner of Insurance to establish and operate a state-based healthcare insurance exchange under the Affordable Care Act (ACA).
Insurance Commissioner Mike Chaney (R) and the bill’s sponsors all say that the legislation could result in savings to the state while potentially increasing participation from health insurance companies that would give Mississippians more options.
Governor 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 put able-bodied adults without dependents on Medicaid and to expand eligibility up to 138 percent of the federal poverty level. Most of the energy in the room 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 either 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 Governor Phil Bryant (R), the idea of creating a state exchange was seen as conceding the permanency of “Obamacare,” and he rejected efforts to do so.
The 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 stand up the state-based exchange.
The Mississippi Insurance Department has estimated that the state could save between $137-$196 million over five years by switching to a state-based exchange with estimated annual operating costs at $18-$27 million.
According to Commissioner Chaney, under current law the state collects a tax from the insurance companies that offer health insurance to Mississippians through the federal ACA exchange, and in turn, pay 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 authored by State Rep. Trey Lamar (R). The House Ways and Means Committee Chairman said the state of Mississippi being able to retain the millions it pays to the federal government now to run its own program, while also seeing additional cost savings, just made sense.
Lamar told Magnolia Tribune that the Insurance Department provided data that showed between 240,000 and 260,000 people were utilizing the federal exchange now.
“A lot of them are high deductible plans, but [many] of the premiums are subsidized,” Lamar said. “That’s a large number. Having the state have more say so over that exchange going forward was a good policy move.”
Federal exchange participants up to 400% of the federal poverty level qualify for either a full or partial subsidy to help with the cost of premiums. For instance, 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 on deductibles and out-of-pocket expenses.
The federal subsidies are made even more lucrative by participating insurers. Right now, every person in this income range in Mississippi has access to $0 premium, $0 deductible, and $0 co-pays for doctor visits and generic prescriptions, according to the Foundation for Government Accountability’s Jonathan Ingram. This is effectively a 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 exchange will continue to be eligible to receive the federal subsidies if they qualify based on their income level.
The initial legislation offered by Rep. Lamar was significantly changed during the course of the session prior to both chambers agreeing on a final conference report. The main revision was that tax credits and deductions to encourage insurers to join the state exchange were stripped from the measure.
Rep. Lamar said the Senate would not agree to those incentives, and as the session waned, the question became if moving to a state exchange was worth the move without them.
“And the answer was yes,” Rep. Lamar said, adding that the incentives could be considered in the future. “We want to rely on the federal government for as little as possible is what we’re trying to say.”
State Senator Josh Harkins (R) handled the policy issue in his chamber. He told Magnolia Tribune he’s willing to discuss incentives, if necessary, as the process develops.
“Commissioner Chaney didn’t indicate that tax credits were what would bring [new health insurance providers] to the state exchange, but if that’s what we need to do at some point, we can certainly discuss that then,” Harkins said.
From what he’s been told from the Insurance Department, Senator Harkins said potential health insurance providers could be more apt to wade into the space “simply because it’s not a federal exchange and not having 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 Commissioner Chaney has expressed that he believes more providers will come to the table when the state is overseeing the program.
“I can’t tell you for sure that it’s going to be better but what I do know is that we didn’t see really any cons to it since it could save the state money and potentially provide more competition in the marketplace which is good for the consumer,” Lamar said.
HB 1647 also creates the Mississippi Health Insurance State Exchange Trust Fund that is to be used to support the creation, implementation or operation of the state exchange overseen by the Commissioner of Insurance. 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 a portion of the funds it is currently sending to the federal government.
A Comprehensive Health Insurance Risk Pool Association is also empowered to develop and fund an online portal that will be available to all Mississippians to assist consumers in selection of a health plan. The association will aggregate information regarding providers, drug coverage and pricing for consumer review.
State Senate Josh Harkins, the Senate Finance Committee Chairman, said Mississippi will have a leg up in this area.
“Commissioner Chaney told us at the end of the session that Kentucky has offered to give us their software for free, and his office will run it,” Harkins said. “That’s a huge deal.”
Harkins noted that the Centers for Medicare and Medicaid Services has held the Bluegrass State’s state-based exchange as the standard for how other states should operate.
The lawmakers believe the state – through the Insurance Department – having more control over the marketing of the exchange as well as managing the access points for consumers to interact and review plans will be helpful.
“I think it’ll be a net positive for Mississippi,” Senator Harkins said.
For his part, Commissioner Chaney has told lawmakers his office supports providing a healthy exchange for Mississippians in lieu of federal efforts to simply move people receiving subsides off the exchange and onto Medicaid.
“The bottom line, that’s why the feds want to try and move people off the marketplace and get them on Medicaid, so they can give them free money. We are against that, I’ll just tell you upfront, so you know where I stand on it,” said Chaney, as previously reported by Magnolia Tribune. “I think it’s a bad policy to take people that are paying insurance and give them something for free.”
When asked if establishing a state-based exchange had any bearing on future Medicaid expansion talks, both Rep. Lamar and Senator Harkins said the issues are separate.
“The health exchanges is here. The feds would have to total eliminate the ACA for it to go away. I don’t see that happening,” Senator Harkins said. “Whether you expand Medicaid to 138% or 100% or do nothing, the exchange is still there. The exchange does not hinge one way or another any Medicaid expansion talk.”
Frank Corder
