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Blue Cross presenters tell task force: ACA rules, medical‑cost growth and market exits are driving premium increases
Summary
Blue Cross Blue Shield of Wyoming told a legislative task force that ACA requirements (guaranteed issue, essential benefits, medical‑loss ratios) and steadily rising medical costs — not single policy fixes — are the primary drivers of rising premiums; presenters cited insurer insolvencies and limited federal subsidy tools as aggravating factors.
Madison — Lawmakers heard detailed testimony Tuesday from Blue Cross Blue Shield of Wyoming about how federal market rules and persistent medical‑cost growth have tightened margins for carriers and pushed premiums higher.
A Blue Cross presenter said the Affordable Care Act’s guarantees of coverage and essential health benefits raised the floor of what plans must cover, while rules barring insurers from pricing based on health status moved premium-setting toward population‑level actuarial calculations. “This is the most important point I’ll try and get across today,” the presenter said. “As medical costs grow, it is absolutely reflected a direct correlation to your premiums.”
Presenters told the Select Committee that components of the ACA removed lifetime and annual maximums and imposed medical‑loss‑ratio (MLR) requirements that force insurers in the individual market to spend roughly 80% of premiums on medical care (85% in large group plans). Those rules, they said, make reserves and reinsurance more consequential for smaller plans. Blue Cross representatives noted that smaller carriers can face rapid reserve depletion after a catastrophic claim and that reinsurance mitigates but does not stop trends in medical‑cost growth.
Committee members pressed presenters about insolvencies on the exchange. Blue Cross pointed to Win Health’s 2016 collapse — where roughly $22 million in unpaid claims were handled by the Wyoming Guarantee Association — and to a shortfall in anticipated CMS risk‑corridor payments as examples where federal program design and insufficient capital reserves contributed to market exits. One presenter said some federal subsidies and payment protections (reinsurance, cost‑sharing reductions, enhanced premium tax credits) have been reduced or ended and that none of the changes to date has reversed the long‑term upward trend in health spending.
Presenters used national and state data to show health spending in Wyoming rose to about $6.4 billion in 2024 and that hospital spending represents a larger share of state health dollars than it does nationally. They said Wyoming’s rural market concentration and low population density both make certain fixed‑cost hospital services comparatively expensive.
Insurance commission and task‑force members asked how to lower premiums. Blue Cross officials and an industry representative said shifting who pays (subsidies) or moving people among plan designs can redistribute costs but will not lower aggregate medical spending unless providers and health‑care delivery change. “You can shift who pays for the overall health‑care expenditure,” one presenter said, “but unless you change the compounding growth, it doesn’t have a meaningful effect.”
The presenter also recommended careful design of state interventions and attention to reserve and risk‑transfer mechanisms for small plans. The committee asked for more granular CMS and Wyoming cost‑report data and said it would continue to explore provider and system‑level reforms at follow‑up meetings.
The hearing continues Wednesday with further presentations and staff follow‑up requests.
