Insurers bracing to hike premiums in 2019 and beyond
Without CSRs or reinsurance, payers warn spending will spike
Insurers of all sizes are warning Affordable Care Act premiums will spike in the coming years after Congress failed to include key measures in its appropriations omnibus.
With the midterm elections looming, there seems little appetite for legislation authorizing three years of cost-sharing reduction payments (CSRs) or creating a $30 billion national reinsurance program, two pillars of once-bipartisan legislation between Senate health committee leaders before the package was derailed over disagreements on abortion language.
Without CSRs or a reinsurance program, insurers say premiums will be continue to grow in the already-unstable ACA market. The Congressional Budget Office and Joint Committee on Taxation estimated that under the bill ultimately left out of the omnibus, non-group premiums would decrease 10% in 2019, and in 2020 and 2021, such premiums would see a reduction of about 20% lower than current law.
The Alliance of Community Health Plans and America’s Health Insurance Plans slammed Congress for not coming to an agreement over the programs, saying that without the provisions to stabilize the individual market, consumers will bear the brunt of rising premium costs.
Congress “is shifting into campaign mode,” despite insurers’ concerns, ACHP CEO Ceci Connolly told Healthcare Dive.
She added that many of ACHP’s members lost “millions of dollars” when the CSR payments were cut off.
“What’s happened is that several pieces of the puzzle have been pulled away. It is hard for me to isolate CSRs, what we are looking at now is a puzzle that is falling apart piece by piece," Connolly said. "Losing the individual mandate, losing the cost sharing reduction subsidies and losing any hint of reinsurance, not to mention the risk corridors that were already gone, you’re just running out of options to manage the cost of this program.”
In late 2017 the Trump administration cut off CSRs to health insurers in the ACA exchanges, arguing the Obama administration had overstepped its constitutional authority by distributing the funds without congressional appropriation.
“The Obama Administration unfortunately went ahead and made CSR payments to insurance companies after requesting — but never ultimately receiving — an appropriation from Congress as required by law,” former HHS Acting Secretary Eric Hargan and CMS Administrator Seema Verma said in a statement at the time.
Health insurer Molina Healthcare argued that some of the impact could be mitigated if Congress still took action.
"Without future CSR payments, Molina expects to see premiums continue to increase and coverage will become unaffordable for many members, especially those not eligible for subsidies. This may lead more consumers to exit the marketplaces, which in turn will undermine the risk pool," Molina told Healthcare Dive in a statement.
Premiums are rising this year but so are the government subsidies that help consumers pay them, shielding most of them from the impact.
Unsubsidized monthly premiums for HealthCare.gov enrollees jumped from $476 to $621, but 83% of consumers received tax credits averaging 86% of the premium.
That resulted in a post-subsidy average of $89 per month, down from $106 per month in 2017. To account for the difference, the government spent more on subsidies this year, spending $550 on average compared to $383 in 2017.
Larry Levitt, senior vice president at the Kaiser Family Foundation, noted one of the biggest losers of the increased subsidy spending is the U.S. Treasury.
Premiums in the ACA marketplace went up a lot this year, in large part because of termination of cost-sharing payments to insurers. That pushed premium subsidies up too.— Larry Levitt (@larry_levitt) April 3, 2018
Looking forward, despite worries about the individual market, consumers may not be running for the exits just yet.
A KFF poll this week found that nine in 10 non-group enrollees will continue to buy insurance in 2019 when the mandate penalty is lifted.
But only 19% of non-group enrollees who responded to the survey were aware the individual mandate penalty will be eliminated beginning in 2019.
“This is nearly identical to the share who said they would continue to buy their own insurance even if the government stopped enforcing the fine for people who don’t have health insurance in October 2017,” the report states.
Insurers are not giving up the fight just yet, but Connolly acknowledged the bleak outlook for Congress to act.
ACHP plans to keep lobbying the Senate when Congress returns to consider a similar package, “but it is probably more realistic that any more additional relief or flexibility may have to come from the administration at this point," Connolly said.
AHIP also said it would continue to work with states, Congress and the administration “to ensure that every American has affordable choices for 2019 and beyond.”
But at least one think tank contends that instituting policies such as CSR payments or a reinsurance program could cause more harm than good.
The Center on Budget and Policy Priorities warned in a report that without additional reforms such as improving subsidies, consumers could face higher costs. The report urged policymakers to block efforts that could push healthy ACA members out of the market to short-term plans.
Following the passage of the omnibus, Senate HELP Committee Ranking Member Patty Murray, D-WA, pledged she would continue to push for an agreement with Republicans. “I am extremely disappointed that we have reached this point — but that does not mean I am giving up on getting this done,” Murray said in a floor speech.
But it is unclear if Murray’s overtures will result in a deal.
Cowen Washington Research Group experts wrote in a note that while a smaller bill like a package of opioid legislation could pass before the August recess, "neither party is likely to budge on abortion language as part of an ACA fix ahead of the elections."
“There are no ‘must-pass’ bills until the next government spending deadline on Oct. 1, but lawmakers will more than likely start FY19 with a Continuing Resolution (CR) until December,” they wrote.
Looking beyond 2019, Connolly pointed to Alaska’s innovation waiver from CMS as a model, saying more regulators should look to follow the state’s example to implement their own reinsurance program to bring stability to the individual market.
- Congressional Budget Office CBO Score: Bipartisan Health Care Stabilization Act of 2018
- Congress.gov H.R.1625 - Consolidated Appropriations Act, 2018
- Healthcare Dive Trump administration to cut off CSR payments, dealing blow to ACA
- Henry J Kaiser Family Foundation Kaiser Health Tracking Poll - March 2018: Non-Group Enrollees
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