Alex Rossman is the Director of Foreign Affairs at the Michigan League For Public Policy (MLPP). In this question and answer session, he discusses how the Inflation Reduction Act will impact the health insurance market and Michiganders.
Get the latest information on state-specific health care policies right in your inbox.
State of reform: How will the recent Whitmer directive health insurance companies to reduce costs, under the Inflation Reduction Act, impact these companies and the health insurance market?
Alex Rossman: “Savings and cheaper coverage for consumers lead to greater involvement in the market, generally including greater engagement from healthier individuals. This will ultimately reduce the risks for the insurers and create savings for the insurance company. The governor, the [Michigan Department of Insurance and Financial Services]and my organization would like all these savings to be returned to consumers. Logistically, insurers had to plan their 2023 rates before there was clarity about the fate of premium tax credits and whether they would be extended. When those premium tax credits were expected to end, insurers anticipated the need to raise prices, and so what’s on book rates doesn’t have the important context of extending premium tax credits. .
The IRA and premium tax credits will have this direct impact on consumers, but will really benefit the market and participation as a whole, and ultimately, insurers as well. I think what we are trying to do and what the governor and the Department of Health have said is that both the benefits and the anticipated savings should come back to consumers. “
SOR: How will this provision of the Inflation Reduction Act impact Michiganders?
AR: “We have data from some of our national partners that approximately 271,000 residents in the state will benefit from the extended premium tax credits. So far, in 2022, it is estimated that they were saving consumers around $ 800 per year. And so there is a real direct impact on individual families and individual portfolios. But the overall effect the changes will have on the market is on benefits, making obtaining health insurance more affordable and a more attractive option for people with lower expected health needs. It makes health insurance coverage more affordable and accessible perhaps for the people who need it [both the most and the least], and then this benefits the pool and the company. So it really has a universal advantage.
[More affordable health insurance will benefit] individuals in both their fiscal and physical health, because when insurance is inaccessible, it leads consumers to skip screenings, standard checks and health services. They tend to go to the emergency room for non-emergency care, and this ultimately increases the costs to hospitals and the state. So, in general, making insurance coverage cheaper makes it more attractive when it comes to people with better health who don’t expect to need many doctor visits.
It translates into larger savings for the health system as a whole when people get those health screenings and treat those health problems early. ”
SOR: What other impacts will the Inflation Reduction Act have on Michiganders?
AR: “We are very excited about the passage of the Inflation Reduction Act and a number of provisions contained therein. One aspect of our organization’s mission is to support people with lower incomes. So, in particular, we support the affordability of health insurance from the point of view of not wanting anyone to have a price on life-saving treatments or drugs. In addition to the premium tax credits we talked about, another great provision that would benefit many Michigan citizens and could have a ripple effect across the healthcare system is the provision with Medicare that can negotiate drug prices. and a cap of $ 2,000 out of pocket expenses on prescription drugs.
Previously, Medicare was unable to leverage its purchasing power as a large service provider to negotiate lower drug costs for the elderly. With Michigan’s proximity to Canada, we hear a lot about people going to Canada to get their prescription drugs due to the increased affordability there. So this is a really big and important piece. Overall, this will lower prescription drug costs for seniors, and seniors in particular are a population that has a lot of ongoing drug needs … So this is a really good opportunity for Medicare with the size and scope of the coverage they provide to use it as leverage to negotiate these prices, with the goal of negotiating price caps for the 20 most expensive drugs by 2029.
Thankfully, Michigan was one of the states that very early under the Affordable Care Act was able to strike a bipartisan agreement and expand Medicaid, create the Healthy Michigan plan, and we continue to see the benefits. But I know that once upon a time, during the Build Back Better discussions and also the previous conversations about the Inflation Reduction Act, there was a possibility that there was a provision to close the coverage gap relative to the 2.2 million people in the states that they did not expand Medicaid and essentially doing so at the federal level. From a defense and health policy perspective, we continue to support similar action for the benefit of those other states that have not [opted to expand Medicaid yet]. “
This interview has been edited for clarity and length.