Several States Have Found Ways To Mitigate Obamacare’s Damage To Their Health Insurance Markets

Galen Institute

"A few states have found a key to undoing some of Obamacare’s damage to their individual health insurance markets by redirecting some federal funding to help sick people. These states are providing separate assistance to those with the highest health costs, thereby reducing premiums and increasing enrollment for healthy people driven out of the market by soaring costs.

"In a new paper published by The Heritage Foundation, scholars Doug Badger and Ed Haislmaier detail how several states have successfully used Obamacare’s Section 1332 waiver authority to begin to revive their non-group health insurance markets with better risk-mitigation strategies.

"They explain in State Innovation: The Key to Affordable Health Insurance Choices that Obamacare’s rigid and centralized federal regulation of the nongroup market has driven premiums up, choices down, and forced millions of people out of the individual health insurance market.

"Section 1332 of the Affordable Care Act permits states to seek waivers from certain federal health insurance requirements if they believe they can do a better job as long as their program doesn’t cost the federal government more money. But the rules the Obama administration subsequently issued were so strict that they make it very difficult for states to get approval for the broader innovative reform proposals envisioned by the provision’s authors.

"Alaska, Minnesota, and Oregon have received waivers from the Trump administration for targeted reform initiatives that have been successful in lowering premiums for individual health insurance by separately subsidizing those with the highest health costs. And the lower premiums also mean increased enrollment.

"According to the paper:

“Alaska was the first state to obtain a section 1332 waiver to implement this type of approach. The state sought a waiver of Obamacare’s “single-risk-pool” requirement, under which people who are likely to file large medical claims must be pooled with those who might never see a doctor. This Obamacare mandate had touched off a vicious cycle, in which insurers charge ever higher premiums, repelling the healthiest customers but not the sickest, resulting in premiums that are increasingly affordable only to those who receive federal subsidies.

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