Budget Committee Passes Gov. Walker’s Reinsurance Legislation

WHA lobbies Budget Committee to remove $80 million Medicaid lapse in bill

February 16, 2018

A core component of Gov. Scott Walker’s health care stability plan moved forward February 12 by passing out of the state Legislature’s Budget Committee on a 13-3 vote, garnering support from all Republicans on the Committee as well as Democratic Rep.Katrina Shankland (D-Stevens Point). The bill, known as Senate bill 770 and Assembly bill 885, was introduced at the request of Gov. Scott Walker and uses the federal 1332 State Innovation Waiver authority to establish a $200 million reinsurance program for health insurance sold on the individual market in Wisconsin.

Wisconsin Hospital Association President/CEO Eric Borgerding provided written testimony to the Committee, stating “it is clear that we cannot rely on solutions or answers from the nation’s capital and should take action at the state level to mitigate premium increases and ensure choice and affordability for the individual market. This is why we support

AB 885 and SB 770, and the steps they set in motion to sustain coverage expansion through a reinsurance program.”

Wisconsin’s Deputy Insurance Commissioner, JP Wieske, in written comments to the Joint Finance Committee (JFC), stated insurance rates will be 13 percent lower with the reinsurance program in place than they would otherwise be without the reinsurance program. Similarly, in 2020, rates would be 12 percent lower than they would be if the reinsurance program were not established. Borgerding and Wieske both cited significant rate and premium increases from 2017 to 2018, resulting in average premium increases of 38 percent in the current plan year and insurers exiting the marketplace.

The Governor’s reinsurance program is funded through federal and state resources, with about 75 percent of this funding coming from federal savings resulting from lower premium increases, resulting in subsidy savings to the federal treasury that can be used to fund the reinsurance program. The original bill provided between $50 and $80 million in state funding through a mandatory lapse from the Medicaid program.

WHA successfully lobbied the JFC to remove this mandatory Medicaid lapse from the proposed bill. The non-partisan Legislative Fiscal Bureau stated the Department of Health Services had few ways to achieve these proposed savings necessitated by a mandatory lapse, but could resort to provider reimbursement cuts to find additional revenue to meet the lapse requirements.

“WHA appreciates the budget committee’s concern with the impact of a mandatory lapse in our state’s Medicaid program and their action to remove this provision from the bill,” said Borgerding following committee action on the legislation.

This story originally appeared in the February 16, 2018 edition of WHA Newsletter