Medicaid expansion took center stage Thursday at a Capitol bill-signing ceremony in which Gov. Steve Bullock signed nine health care bills, including one that made Montana the most recent state to establish a reinsurance program.
The program’s goal is to reduce premiums for Montanans obtaining health care through the Affordable Care Act’s marketplace by reimbursing insurance companies for especially high-cost claims. Bullock officially signed Senate Bill 125 last week, creating the state reinsurance association, which needed its board of directors to meet for the first time Wednesday to comply with the new law.
The governor signed 20 bills in all Thursday, though his lone veto drew the ire of state Commissioner of Securities and Insurance Matt Rosendale.
Sen. Albert Olszewski, R-Kalispell, carried Senate Bill 71 at Rosendale’s request. The bill sought to reduce prescription drug prices by regulating the contracts insurance companies can sign with pharmacy benefit managers, who are hired to negotiate prices with pharmacies and manufacturers.
A Thursday veto letter from Bullock’s office maintained Olszewski’s bill would increase administrative costs, and tied in its fate with the new state reinsurance program by claiming it would offset savings the program creates.
Bullock vetoed two bills in the 2017 sessions intended to establish a reinsurance program. The new law, carried by Sen. Steve Fitzpatrick, R-Great Falls, directs reinsurance board members to set the floor and cap for claims eligible for reinsurance at no less than $40,000 and no more than $1 million, respectively, with a rate of reimbursement between 50% and 80%.
The law dictates a 1.2% assessment on member premium volume to provide the state revenue necessary to fund reinsurance payments, with a much heavier federal share still to be approved. Earlier this month, the Associated Press reported the state and federal shares to be about $15 million and $60 million, respectively.
Nearly 47,700 Montanans signed up for ACA coverage for 2019 during last year's open enrollment period, about 5,000 fewer than the year before. Bullock said the law could lower premium rates up to 10%.
“I think this is one of those bills where we look back and say, ‘This is how the Legislature should work,’” Fitzpatrick said at Thursday’s ceremony.
The law allowed Bullock to appoint one director on the five-member state reinsurance board “to represent the public interest.” His choice was Mike Batista, associate state director of advocacy and outreach for AARP Montana.
Rosendale, as a participating association member, appointed CFO Richard Daniels of Allegiance Benefit Plan Management. The remaining seats on the board belong to the three insurers that sell on the federal marketplace in Montana: Richard Miltenberger, president of Montana Health Co-Op; Dr. Monica Berner, president of Blue Cross and Blue Shield of Montana; and Cody Langbehn, vice president and Montana regional director of PacificSource.
Meanwhile, the veto letter for Olszewski's bill surfaced soon after Thursday's ceremony. Bullock claimed in the letter that the bill would increase administrative costs, and risked higher drug prices under “regional or nonprofit” plans while reducing access to prescription drugs for rural Montanans by prohibiting "certain mail-order pharmacies."
Rosendale spokesman Kyle Schmauch issued a line-by-line response Thursday afternoon that labeled many of the letter's claims false, especially the one that Olszewski's bill would restrict access to mail-order pharmacies.
Regarding the relationship of Olszewski's bill to the reinsurance program, Schmauch said that even if there was evidence the bill would cause market instability — which he denied — the costs would be far outweighed by the new program.
“Prescription drugs make up a big portion of the insurance people pay … and insurance rates are a direct result of health care costs,” Schmauch said. “So it’s a big chunk, but we’re talking about $7-8 million in savings for consumers from Senate Bill 71 when we’re talking about tens and tens of millions of dollars in offsets from a reinsurance program. The governor is just absolutely full of it in that veto letter.”
Fitzpatrick had a second bill in Thursday's ceremony. Bullock wrote that Senate Bill 83 "directly" addressed health care costs. That bill outlines fees benefit managers can and cannot charge pharmacies, forbids benefit managers from charging co-payments that exceed the cost of a drug, and clarifies the rights of pharmacies.
Schmauch countered that Olszewski’s bill was the only one presented in 2019 that would have lowered prescription drug prices, calling reforms proposed by other prescription drug legislation "really minor" in comparison.