The CMS gives insurers an additional three weeks to file rates for 2018, but the fate of cost-sharing subsidies remains unclear.
As lawmakers on Capitol Hill debate plans to stabilize the Affordable Care Act’s state exchanges, the Centers for Medicare and Medicaid Services (CMS) have given insurers another three weeks to submit their rates for 2018. Insurers now have until September 5th to finalize their individual marketplace prices.
The CMS acknowledged that ACA insurers might be forced to revise rates due to the possibility the federal government might withdraw cost-sharing reduction (CSR) subsidies. CSRs help low-income enrollees afford out-of-pocket medical costs such as copays and deductibles. The federal government, in turn, compensates exchange-based insurers for providing the cost-sharing discounts. This year, the subsidies totaled $7 billion and are on track to hit $10 billion next year — if they remain in place.
The Trump administration has authorized the CSR payments on a month-to-month basis. Although President Trump agreed to fund the subsidies in August, he has consistently expressed an interest in ending them as a means to get lawmakers from both parties to negotiate on healthcare reform.
What Will Insurers Do?
Even though the CMS, which oversees the Obamacare exchanges, stated in a memo that “there have been no changes regarding Health and Human Services’ ability to make cost-sharing reduction payments to issuers,” health insurance companies are much less sure. With the fate of the CSRs still undecided, several insurers have responded by hiking rates (if they’ve submitted their proposals already) or exiting exchange marketplaces. Anthem Inc., for example, recently withdrew from state exchanges in Nevada and Georgia, citing lingering uncertainty over whether the subsidies will continue.
Several insurers have calculated rate plans with and without the CSRs. New Jersey’s largest health insurer, Horizon Blue Cross Blue Shield of New Jersey, has proposed a 22% rate hike next year, according to North Jersey.com. The insurer maintained, however, that the rate increase would be in the single digits if not for the “uncertainty surrounding the ACA.”
According to a recent report from the Kaiser Family Foundation, initial premium requests in 21 major cities ranged from a 5% decrease in Providence, Rhode Island, to a 49% jump in Wilmington, Delaware. In between those extremes, some areas either saw no change or modest increases.
While insurers welcomed the postponement, some were unsure it would ultimately bring clarity to the situation. “Until health plans know whether CSRs are going to be available in 2018 or not, they can’t have confidence that they’re pricing their products correctly,” Avalere Health’s Senior Manager Chris Sloan told The Hill.
“Meanwhile, Teresa Miller, Pennsylvania’s Insurance Commissioner, saidthat the delay provides states with the opportunity to press for a resolution. “A little more time will give us time to explain further how critical it is to get assistance to get the market to stabilize,” she said.
Senate Hearings Planned
The Senate’s Health Committee has scheduled two hearings in early September to discuss measures to stabilize the individual ACA marketplace. The head of the committee, Lamar Alexander (R-TN), wants to craft a bill that allows a one-year extension of the CRS payments. If those subsidies are cut off, the Congressional Budget Office projected a 20% rise in low-cost ACA silver plans next year. To make premiums more affordable, Sen. Alexander proposed allowing insurers to offer lower-cost plans with less coverage.
Despite the extension, insurers and state regulators still face a tight deadline. Final contracts to participate on the ACA exchanges must be signed by September 27. Open enrollment begins November 1 — the date on which the CMS says all rate filings are to be posted on Healthcare.gov.
That doesn’t leave insurance agents and their clients much time to decide on a healthcare plan for 2018 if they receive insurance from a state exchange. As a result, it’s imperative to keep abreast of any developments regarding healthcare reform so you and your client can plan ahead for any contingency. Whatever happens in Washington, your clients need the most affordable health insurance plan.