Insurers filing amidst uncertainty over Obamacare payments

Arkansas’ individual Marketplace health insurers are filing rate requests amidst uncertainty over the future of cost sharing reduction payments, though one analysis said the change could reduce the number of uninsured Americans.

The three insurers on Arkansas’ individual insurance exchange, Arkansas Blue Cross and Blue Shield, Centene Corp. and Qualchoice, submitted details of their proposed plans before the state deadline Monday. Their 2018 rate requests are due July 14.

They did so not knowing if their customers would continue to be eligible for cost-sharing reduction subsidies through the Affordable Care Act, otherwise known as Obamacare.

And that makes the task harder, said Max Greenwood, Arkansas Blue Cross and Blue Shield spokesperson.

“In general, any time you have uncertainty in the marketplace, it is difficult to set rates,” she said.

Under the Affordable Care Act, insurers are required to give cost sharing reduction subsidies, or discounts from deductibles, co-payments and out-of-pocket expenses – but only for “silver” level plans for individuals earning from 100-250% of the federal poverty level. The federal government then reimburses the insurance companies. Nearly three quarters of the individuals who purchased health insurance in 2017 through the federal insurance exchanges qualified, and for 2017 those payments are expected to reach $7 billion in 2018.

The insurance plans bought through those exchanges – referred to as bronze, silver, gold and platinum – progressively cover more health care costs but have higher premiums.

House Republicans in 2014 sued the Obama administration on the grounds that Congress never appropriated funds for the subsidies, and in 2016 a district court ordered the government to end them but allowed them to continue while the case is under appeal.

The $1 trillion spending bill recently passed by Congress did not include funding, leaving the decision in the hands of the Trump administration, which has not said whether or not the payments will continue. However, on April 26, President Trump wrote a tweet saying, “Democrats are trying to bail out insurance companies from disastrous #ObamaCare and Puerto Rico with your tax dollars. Sad!”

Ending the cost-sharing subsidies would result in insurance companies raising rates 19% but only on silver plans, according to the Kaiser Family Foundation, leading the government to offset premium increases with higher tax credits across all the plans. The change would cost the federal government $2.3 billion in 2018 and $31 billion from 2018-27, according to the Kaiser Foundation.

In March 2016, about 85% of the 11.1 million consumers, or 9.4 million, who bought health insurance through the Affordable Care Act’s Marketplace exchange received a credit, according to the Centers for Medicare & Medicaid Services.

The consulting firm Oliver Wyman Actuarial Consulting found in an analysis by Dianna Welch and Kurt Giesa posted May 12 that ending the subsidies would result in larger tax credits that effectively would make bronze plans free for consumers and would make other plans cheaper, potentially attracting more people into the insurance market.

According to Oliver Wyman’s analysis, an individual up to age 40 living in Phoenix with an income up to 250% of the federal poverty level would pay nothing for a bronze plan, while a 60-year-old earning 150% of the federal poverty level would pay $65 for a gold plan.

“In fact, according to our projections, subsidies could increase to the extent that they would actually exceed the cost of a bronze plan for many lower-income enrollees,” the analysts wrote. “A substantial portion of the nearly 7 million marketplace enrollees eligible for CSR could receive a bronze-level plan for no cost, or upgrade to a gold-level plan at very low premiums.”

However, Ray Hanley, president and chief executive officer of the Arkansas Foundation for Medical Care, said the change instead could result in some people dropping their insurance because of the higher out-of-pocket expenses. That would lead to more patients receiving uncompensated care through the emergency room. On the other hand, some expensive patients would leave insurance pools, potentially resulting in lower premiums for those remaining in them, he said.

Blue Cross’ Greenwood said it’s hard to know how the change would affect the market.

“Any assumption you want to make, you can probably find an article to support it, and so right now, I think the only certainty is that there is no certainty,” she said.