Choice and competition in the health insurance market are not only good for consumers, but providers as well.
Background
When Gov. Brian Kemp was sworn into office on January 14, 2019, the health insurance landscape in Georgia was dire. Since then, that landscape has seen dramatic improvements thanks to decisions that put the interests of our state and its citizens first. One-and-a-half terms later, it is worth highlighting and explaining the Kemp administration’s extraordinary successes in the health insurance world, as well as offering potential next steps in building on that success.
Most Georgians receive their health insurance through employer-sponsored plans. However, approximately 10% of our residents do not have access to an employer-sponsored plan and rely on the individual health insurance market to obtain coverage. In 2018, a Georgian looking for coverage on the individual market faced significant challenges, mainly due to a lack of insurers. A lack of choice creates significant costs for the individual consumer. In 2018, only four health insurance carriers operated on the individual market, and 145 of our counties had only one health insurer, while the other 14 had only two.
Having only one insurer in 145 counties means no significant market competition is taking place. This lack of competition also means providers were forced to accept the terms of the only insurer operating in their county, leading to lower reimbursement rates. This lack of competition resulted in higher insurance rates and consumers paying more than they usually would, or having to go without insurance due to the cost. In 2019, over 1.5 million Georgians eligible for individual market plans were uninsured.
Gov. Kemp and his administration sought, with enthusiastic support from the legislature, the Patients First Act to combat the situation. This article concentrates on two primary policies of the Act – the 1332 waiver that instituted the state’s reinsurance program and the Georgia Access program – and how they worked in tandem to radically change Georgia’s individual health insurance market.
Reinsurance
Section 1332 of the Affordable Care Act permits states to submit innovation waivers to pursue strategies that provide residents with access to high-quality, affordable health insurance. Subject to approval by the U.S. Department of Health and Human Services and the Department of the Treasury, applicants must demonstrate that the waiver will:
- Provide coverage at least as comprehensive as the coverage provided without the waiver;
- Provide coverage and cost-sharing protections against excessive out-of-pocket spending at least as affordable as without the waiver;
- Provide coverage to at least a comparable number of residents as without the waiver; and
- Not increase the federal deficit.
Georgia chose to submit a waiver for a state reinsurance program, which is, in its purest form, insurance for insurance companies. However, a state-sponsored reinsurance program in the health insurance industry is slightly different. In the property-casualty market, insurance companies often use reinsurance to protect themselves from high claims. The reinsurer’s business interest is to sell reinsurance to insurers at a profit. For a state, reinsurance for health insurers primarily stabilizes insurance markets and makes coverage more available and affordable. Thus, the state is not making a profit but instead is passing the savings on to consumers in the market. Reinsurance became necessary in Georgia because the ACA caused premiums to spike and insurers to exit the market. Insurance was both unaffordable and unavailable.
Gov. Kemp’s 1332 waiver was approved in November 2020. Effective January 1, 2022, through December 31, 2026, the federal government funds two-thirds of the program’s cost, with the state providing the rest. Under the waiver, Georgia reimburses health insurers selling individual market plans for a percentage of claims above a certain amount. This helps control insurer costs and leads to lower premiums.
The reinsurance program stabilized and lowered premiums in the market. In 2023, statewide premiums were reduced by 12.4%. Moreover, in Georgia’s most rural counties, premiums in 2023 were reduced by 34.3%. Besides lowering prices for consumers, insurers were encouraged to come back to the state. The increased competition also led to lower premiums.
These are spectacular successes by any measure. In contrast to 2018, when 145 Georgia counties had only one carrier and the other 14 had only two, now only one county has as few as two carriers. Sixteen percent have at least three, 31% have four and over 52% have five or more. Moreover, in 2018 there were only four carriers participating in Georgia’s individual market, but now in 2024 there are 10. The state reinsurance program has greatly increased citizens’ health insurance choices while dramatically lowering premiums.
Georgia Access
The other equally impressive accomplishment of the Kemp administration has to do with the spectacular growth in enrollments in individual health insurance plans Georgia has seen. This is due in large part to the establishment of a state-based healthcare exchange for the benefit of Georgians. Georgia Access is the first of its kind and utilizes private-sector efficiencies to offer maximum choice to Georgia citizens.
When passed, the ACA gave states the option to set up their own exchanges or to rely on what has become the much-derided federal option, HealthCare.gov. Not having its own exchange means state decisions about the individual healthcare market are made by the federal government, which means the state has little to no say in decisions about its own citizens. This also means unaccountable federal bureaucrats determine the dates for Open Enrollment and any Special Enrollment Periods as well as user fees and a whole host of other major decisions.
In 2024, 22 states have some form of a state-based exchange, including Georgia. Our state-based exchange, Georgia Access, empowers our state to make decisions that better serve our citizens. Georgia Access utilizes private-sector efficiencies to offer Georgians maximum choice, resulting in impressive enrollment gains. Through Section 1332, Georgia is free to innovate the exchange by creating a learning hub about health insurance, offering non-QHPs or even considering allowing other necessary insurance products like auto or homeowners policies on the same technology platform.
State officials in Georgia better understand our state, its challenges and its citizens and are therefore far better positioned to make decisions on behalf of their state as opposed to bureaucrats in Washington. Moreover, Georgia’s government officials are accountable to the people of Georgia, not Congress or anyone else in Washington. For instance, if a Georgian has an issue with his insurance policy, he can easily contact Office of Insurance and Safety Fire Commissioner John King, who administers the Georgia Access program. As an elected official, Commissioner King is heavily incentivized to assist Georgians in any way he can. However, a Georgian seeking similar assistance from the federal Center for Consumer Information and Insurance Oversight or even more generally from the Centers for Medicare and Medicaid Services will not receive nearly the same level of service and care. This is not to say that federal officials are uncaring. But because they are concerned with markets in multiple states, they are unable to deliver the same level of service.
Another key benefit of Georgia Access is that it brings revenue back into the state. When states use Healthcare.gov, carriers pay the federal government a percentage of gross premiums collected on all exchange enrollments. This means that not only are most states overpaying the federal government for the services of Healthcare.gov, but also that states have a fee surplus.
Under Georgia Access, that percentage of gross premium is set by and collected by Georgia Access. For Plan Year 2024, the total amount of user fees for Georgia will likely fall somewhere between $170 million and $200 million, and the cost of running Georgia Access is far less than the total amount of fees collected. In the case of Georgia Access, Governor Kemp reinvested those excess fees in the reinsurance program. Thus, Georgia Access not only provides a place for Georgians to access affordable insurance, but it also acts as the chief mechanism through which premiums are stabilized.
Finally, Georgia Access incentivizes private-sector investment and innovation. Unlike many other states, Georgia has elected to include Enhanced Direct Enrollment Entities (EDEs), brokers and agents as part of its platform. It surprises many to learn that Healthcare.gov also utilizes EDEs, brokers and agents. In fact, the majority of Americans purchasing individual market plans in states using Healthcare.gov do so via an EDE, agent or broker. When many states transition to a state-based exchange, they choose to make the state portal the only path to coverage. However, this can cause serious disruption to consumers who were not purchasing coverage via the federal portal. Moreover, it fails to utilize the efficiencies and innovation that can be gained by harnessing the power of the marketplace.
By utilizing EDEs, brokers and agents, Georgia is putting private businesses and small businesses at the forefront of Georgia Access. Instead of “expanding government,” Georgia Access is adapting private-sector efficiencies and creativity for the betterment of our citizens. This brings more competition to Georgia, which then spurs further innovation and the use of emerging technologies and ideas. For instance, with Georgia Access, consumers can now purchase their previous HealthCare.gov health plan via the Georgia Access portal, an EDE, a local agent or directly from the carrier. This incentivizes business to remain in the Georgia market and increases market competition, which then means more choice and lower costs.
Additionally, Georgia Access involves agents in helping citizens access coverage. Emphasis on agents means that Georgia Access relies heavily on local small businesses. Insurance agents have a presence in every community in this state, and they present an opportunity for Georgians to receive personal guidance while making important healthcare decisions. This delivers better outcomes than leaving individuals to individually navigate a website run by the federal government.
Georgia Access is a pioneering, conservative way to navigate our current health insurance market – one that takes power back from Washington, D.C., empowers Georgia, brings revenue back to our state and utilizes private business to benefit our citizens.
“Yes, that’s all fine,” one might say. “But does it work?” The numbers speak for themselves. In 2019, approximately 375,000 enrolled in plans on the individual market. In 2024, that number rose to approximately 1.3 million. This means that during the Kemp administration, approximately 1 million more Georgians have enrolled in health insurance plans on the individual market. This astounding statistic means that about 9% of the total population of the state gained health insurance due to the Kemp administration’s Patients First Act.
Kemp’s tenure in office has seen statewide health insurance premium reductions for individual market plans of 12%, with reductions rising as high as 30% in rural areas. Moreover, 1 million Georgians, or 9% of the state’s population that previously did not have health insurance, have obtained it during the Kemp administration. Not only has Georgia carved a path forward for health insurance innovation for its citizens, it has also blazed a trail for other states.
Other governors should emulate Kemp’s success if they wish to seize power back from Washington, D.C., bring revenue to their states and use the power of the private sector. They would also position their states to better weather national elections whether they are contending with a Democratic administration increasingly hostile to state sovereignty or a Republican administration looking to de-emphasize federal bureaucracy. The creation of a state-based exchange puts governors and state legislators back in the driver’s seat of their state health insurance markets.
Next Steps
Having achieved such monumental success in the individual health insurance space, how else might Georgia build on that success? The Kemp administration could look at ways to strengthen the small group market. It also could increase incentives for small businesses to purchase coverage or provide benefits to their employees through Individual Coverage HRAs (ICHRAs), Qualified Small Employer HRAs (QSEHRAs), Association Health Plans or efficiencies gained via professional employer organizations. Looking further afield, the administration could modernize the state Medicaid program through efficiencies gained by becoming a determination state and utilizing the state-based exchange to more efficiently determine Medicaid eligibility, or enacting process optimizations. Another possibility is site-neutral payment reform, which would reduce consumer costs to the betterment of Georgians.
Even further afield, some states are establishing child healthcare exchanges where the proven health insurance exchange model is applied to the creation of a one-stop childcare exchange. This can significantly help families find affordable childcare, improve visibility throughout the childcare system to help boost capacity, benefit child care providers and reduce wait times.
No matter the path Gov. Kemp takes in the rest of his second term, his administration’s efforts thus far have provided Georgians with extraordinary benefits.
Gregg Conley is the Director of Business Development at GetInsured. Previously he served as Executive Counsel to Insurance and Safety Fire Commissioner John King, where he was the executive sponsor of the Georgia Access program.