health insurance claim form with stethoscope on wood table

The Wisconsin Office of the Commissioner of Insurance (OCI) formally submitted the 1332 waiver request on April 18. This waiver request, authorized in section 1332 of the Affordable Care Act (“State Innovation Waivers”), will allow Wisconsin to utilize federal ($150 million) and state ($50 million) funds in order to establish a mechanism for insurers to manage the risk of higher cost claims, while lowering rates for consumers in the Federally Facilitated Marketplace (the Exchange).

The request generally follows the models of other states (Alaska, Minnesota, and Oregon) in seeking to develop a reinsurance program in order to reduce rates faced by consumers. Projections included in the waiver request indicate rates could drop 5% in 2019 as a result of the proposal; 2018 rate increases were up 44%, with multiple insurers withdrawing from the market due to unmanageable risk, and many consumers facing correspondingly fewer and more expensive options.

OCI expects relatively rapid approval. However, uncertainties remain at the federal level as it relates to the Cost Sharing Reduction (CSR) payments to insurers. Therefore, OCI is instructing insurers to submit rate proposals under the assumption that there will be no CSRs.

Insurers should also “silver-load” their plans, as many did in 2018, in order to mitigate the impact on consumers when CSRs were not funded. In addition, insurers are required to separately include the rate impact of the 1332 waiver reinsurance proposal, providing consumers and regulators with transparency regarding the practical impact of the waiver request. Overall, less volatility in the rates and in insurer participation is expected for 2019 as compared to 2018.

Insurers must file rates with OCI by July 2, 2018. OCI will then review the rates for approximately 45 days before submitting the rates to the federal government. After federal review and approval, contracts are expected to be signed in September.