HELENA — For the first time under the federal health-care law known as “Obamacare,” all three companies selling health coverage in Montana’s individual market are proposing lower premiums for the coming year.
“This is a really big deal for the Montana Affordable Care Act market,” said John Doran of Montana Blue Cross and Blue Shield. “We’ve never had a regulatory opportunity to drive down premiums this far.”
Blue Cross, the Montana Health Co-op and PacificSource are proposing 2020 premiums for individual policies that will be, on average, 8 percent to 14 percent lower than 2019, depending on the company.
State Auditor Matt Rosendale, who regulates insurance, announced the proposed rates, which his office must review before they’re finalized later this year.
Rosendale, a Republican running for the U.S. House in 2020, said part of the decrease is because of new state reinsurance program that he supported and was approved by the 2019 Legislature.
Insurers agreed, saying the reinsurance pool — which will pay for high-cost claims — accounts for half or more of the proposed rate decreases.
“It allows the insurance companies to have rate stabilization for those really big claims, the ones that are the earthquakes in health insurance,” said Richard Miltenberger, CEO of the Montana Health Co-op. “And by stabilizing that cost, it brings the cost down for the consumer.”
The rates are for policies on the individual market, which covers about 50,000 people in Montana. They don’t affect group policies or government-funded insurance, which cover the vast majority of Montanans with health insurance.
Blue Cross said it’s proposing an average reduction of 14 percent for its 2020 policies in the individual market; PacificSource is at 13.4 percent, and the Co-op is at 8 percent.
Under the ACA, or “Obamacare,” buyers of these policies also are eligible for federal subsidies, if they earn up to 400 percent of the federal poverty level (about $50,000 a year for a single person).
Miltenberger said 80 percent to 90 percent of the buyers of these policies qualify for some level of subsidy. Another one-third of these customers also qualify for “cost-sharing” subsidies, which further lower the cost of the policies.
However, most of these policies still have high deductibles, often in the $5,000 to $6,000 a year range, or even higher.
“A lot of Montana families are having (these) out-of-pocket costs that they just can’t come close to affording,” Miltenberger said. “It’s a big problem and it’s going to take a federal solution.”
Still, he said the premium decreases for next year are a welcome change and a sign that the ACA is working to provide people with health coverage.
“There’s been a lot of turmoil for three or four years, but the last year or two, we’ve actually seen the system working, with rate reductions or at least stability,” Miltenberger said.
Doran also noted that the reinsurance pool still needs to be approved by the federal government, but said he’s confident that will happen.
The pool, once approved, will take effect in 2020. It’s funded by a 1.2 percent assessment on all major-medical insurance policies and some money from the federal government.