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Research Questions

  1. What would the effects of the Iowa Stopgap Measure be on healthcare costs and coverage?
  2. Does the Iowa Stopgap Measure (designed to stabilize Iowa's Affordable Care Act–compliant healthcare market) meet 1332 State Innovation Waiver criteria?

On August 21, 2017, Iowa submitted a 1332 State Innovation Waiver application, known as the Iowa Stopgap Measure (ISM), to the U.S Treasury Department and the U.S. Department of Health and Human Services. The ISM was designed to stabilize Iowa's Affordable Care Act (ACA)–compliant individual market through a series of modifications: (1) a requirement that all insurers in the individual market offer a single standard plan, similar to the ACA's silver plan; (2) elimination of CSR subsidies for those with incomes between 200 and 250 percent of the federal poverty level (FPL); (3) a new premium tax credit structure (tax credits would vary by age and income and would be extended to individual market enrollees with incomes above 400 percent of the FPL); and (4) federally funded reinsurance on all annual individual market claims above $100,000. We found that the ISM is likely to lower premiums, decrease the number of uninsured, and decrease average health care spending for all groups on the ACA-compliant health insurance market. We estimate that ISM is likely to increase the federal deficit, but that the per-enrollee cost on the ACA-compliant market would decrease. We estimate that all groups with incomes over 200 percent of FPL on the ACA-compliant market could be at risk of foregoing necessary care, as they lose access to higher actuarial value plans. A reinsurance-only program, without the additional ISM features, could insure nearly as many people with no adverse deficit impact, assuming that reinsurance stimulates competition.

Key Findings

Key Findings

  • The Iowa Stopgap Measure is likely to lower premiums, decrease the number of uninsured, and decrease average health care spending for most groups on the Affordable Care Act (ACA)–compliant health insurance market.
  • The Iowa Stopgap Measure is also likely to increase the federal deficit, but the federal cost per enrollee on the ACA-compliant individual market would be lower than under current law.
  • In addition, we estimate that enrollees with incomes over 200 percent of the federal poverty level on the ACA-compliant market could be at risk of foregoing necessary care, as they lose access to the higher actuarial value gold and platinum plans.
  • For these reasons, we estimate that the Iowa Stopgap Measure would not meet the 1332 waiver criteria, which stipulate that proposed modifications must not increase the federal deficit.

Recommendation

  • A reinsurance-only program, without the additional features of the Iowa Stopgap Measure, could insure nearly as many people as the Iowa Stopgap Measure with no adverse deficit impact, assuming that reinsurance is sufficient to stimulate competition in the Iowa insurance market.

Research conducted by

This project is a RAND Venture. Funding was provided by the Paul O'Neill Alcoa Chair in Policy Analysis. The research was conducted within the RAND Health (NSRD) of the RAND Corporation.

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