Continuation of cost-sharing subsidies won't ease insurers' uncertainty

Dive Brief:

  • The HHS may continue to pay cost-sharing subsidies to health insurance companies but, in response to a recent New York Times article, the agency stated the payments are "not an indication of what will happen in the future. No decisions have been made about how the administration will proceed."

  • The federal government currently pays $7 billion each year to insurers for cost-sharing subsidies and 58% of people who signed up for health insurance through the Affordable Care Act (ACA) this year qualify for these subsidies, according to the Times.

  • The statement was issued amid an ongoing House Republican-led lawsuit that says the subsidies are illegal and unconstitutional because Congress didn’t authorize them. A federal district judge ordered a halt to subsidy payments last year but suspended the order so the government could continue payments during the appeals process.

Dive Insight:

The cost-sharing reduction (CSR) payments are made to insurers to offset the cost of low-income members’ deductibles, premiums and out-of-pocket costs. However, an official cost-sharing subsidy plan has yet to be crafted. 

“As (health) plans make decisions for 2018, they do so with a view of wanting to serve consumers in the market for  the full year," Kristine Grow, a spokeswoman for America’s Health Insurance Plans, told Talking Points Memo. "That’s why it’s so important to know what will happen with CSRs long term.”

Health insurers and the healthcare industry as a whole have grown concerned about the individual market’s stability at least in part because of the ongoing subsidy lawsuit, the presidential administration saying the ACA will eventually “explode” so it must be repealed, as well as the unpredictability about what the next year will bring for the market.

Insurers will soon need to decide whether to continue to offer individual plans through the ACA for 2018. Aetna and Wellmark Blue Cross recently pulled out of the Iowa health insurance exchanges, which leaves 94 counties with only one choice for a health insurance plan. Also, Humana announced earlier this year it will not be offering any plans on the exchanges for 2018.

More payers will likely flee the ACA marketplace if they don’t get billions to stabilize the individual market. Not paying subsidies could lead to more uninsured Americans, which will have a direct impact on hospitals, doctors and the entire healthcare industry. Already, the number of uninsured rose this year. But the fact that HHS has not dropped its appeal may tempt undecided payers to stay in the marketplace for at least another year. Still, the uncertainty surrounding HHS' new statement might muddy waters even further until a clear plan is unveiled.

Filed Under: Payer Policy & Regulation
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