From the Arkansas Times:
Insurance companies have proposed a net reduction in premiums of 2 percent next year for the Arkansas Health Insurance Marketplace, the health insurance exchange created by the Affordable Care Act. The Marketplace includes all of the plans used for the private option, the state’s unique plan which uses Medicaid funds to purchase private health insurance for low-income Arkansans….
Health insurance premiums for consumers buying coverage on their own was growing 10 percent or more per year before Obamacare. It’s become almost axiomatic in health care that insurance premiums will go up every year, so a potential decline is huge news.
This is good news for two reasons. The first is the simple reason that managed competition seems to be working reasonably well in Arkansas. There were a couple of companies that were approved for increases, and more that were approved for decreases. Flat or slightly declining aggregate insurance pricing is a massive deal for the state budget, and a good deal for the residents. Given the federal subsidy structure, almost every subsidized Arkansas resident (assuming income growth at or below national rates) will see their out of pocket premium expenses stay flat or go down slightly in the second year.
More interestingly from my point of view is how this applies to the 1115 waiver that established the private option in Arkansas. The 1115 waiver process has a number of requirements including federal government budget neutrality or budget gain. I’ve always been a bit suspicious of private option net budget neutrality as the reimbursement rates are significantly higher. A net decrease in Silver premiums makes achieving federal budget neutrality more reasonable.