Georgia healthcare plan would reduce costs for residents

Roughly one in seven Georgians lacks health coverage, according to newly released figures from the U.S. Census. In several counties, more than one in three residents have no insurance.

The Affordable Care Act deserves part of the blame. The law’s onerous mandates have driven up the cost of insurance. Since 2013, the year before most of the mandates went into effect, monthly premiums for the average individual market plan have more than doubled.

Gov. Brian Kemp has a plan to address this issue. His recently unveiled “Georgia Access” proposal would allow residents to bypass the state exchange, where all plans must adhere to the ACA’s expensive requirements, and thereby give them access to lower-cost insurance options.

If enacted, the governor’s plan could reduce Georgia’s uninsured rate for the first time in years.

Congress hoped the ACA’s online insurance marketplaces would expand access to affordable coverage. But the opposite has happened. The law’s requirements, such as the “essential health benefits” mandate forcing every plan to cover a long list of procedures and services like drug rehab and lab tests, have caused insurers’ spending to spike. To cover those soaring costs, they’ve had to repeatedly hike premiums.

Between 2016 and 2019, average individual premiums in Georgia increased from $287 to $487. Over that same period, the share of state residents without coverage increased from 12.9 percent to 13.7 percent. That’s the third-highest uninsured rate of any state.

Gov. Kemp is trying to find a way around the Affordable Care Act’s costly provisions. Section 1332 of the Act allows states to apply for waivers from the law in order to experiment with different models of providing affordable coverage.

The Georgia Access waiver proposes two main reforms. First, state officials want to create a $300 million “reinsurance” program jointly funded by the state and federal government. The program would reimburse insurers for a portion of the money they spend on their sickest customers.

Such reinsurance programs effectively cap insurers’ losses on patients who need thousands and thousands of dollars’ worth of care. Secure in the knowledge that they won’t face potentially catastrophic claims, insurers can then reduce premiums across the board. That can allow them to attract previously uninsured enrollees who stayed away because of high costs.

The federal government has already approved reinsurance programs in a dozen other states, including Colorado, Wisconsin, and Maryland. If it approves Georgia’s waiver, some residents currently paying $1,000 a month for coverage could see their premiums fall by nearly $300.

The second part of the waiver would let Georgians bypass the ACA’s online marketplace, Healthcare.gov. Residents could purchase coverage from a variety of outlets, including third-party insurance brokers and even insurers themselves. This reform would give consumers the option of choosing lower-cost plans that don’t conform to the ACA’s rigid mandates.

The waiver would also give low-income Georgians more flexible subsidies. Right now, these folks can only purchase subsidized coverage through Healthcare.gov. Under Gov. Kemp’s plan, they’d be able to take their subsidies to purchase coverage off the exchange as well.

If Georgia Access gains approval, the state’s insurance market will become more competitive and affordable. By 2022, premiums could drop 11.3 percent, on average. An estimated 30,000 previously uninsured Georgians would sign up for individual-market coverage in 2022.

Some critics of the plan fear that insurance brokers and agents may lead consumers towards plans that don’t meet their needs. But those fears are misplaced.

Brokers and agents are specifically trained and licensed by the state to help consumers identify the most appropriate plan for them. Three-quarters of agents spend “most or a lot of their time” explaining coverage to clients, according to a Kaiser Family Foundation analysis. Eight in ten consumers find brokers and agents to be “very or somewhat helpful” in researching health plans, according to an Urban Institute survey.

There’s even evidence linking brokers to lower overall healthcare costs. According to research conducted by economists at the University of Minnesota, markets with more brokers tend to have lower premiums.

Gov. Kemp’s proposed waiver would relieve Georgians from rising premiums and limited insurance choices. Let’s hope the federal government approves it.

Mychal H. Walker Sr. is president of the Georgia Association of Health Underwriters.