Dive Brief:
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Monthly premiums for individual health plans sold in the Affordable Care Act (ACA) exchanges in California are expected to rise by 12.5% in 2018, according to preliminary numbers in a new Covered California report. The rate increase is down from more than 13% in 2017.
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Covered California, which sells health plans to about 1.4 million people through the ACA, said people in ACA plans could save about 3% if they switched to a lowest tier plan. Officials also warned that “silver tier” plans, which are the most popular, could increase more than 12.5% if the White House stops cost-sharing reduction (CSR) payments to payers.
- The report also said Anthem Blue Cross will stop offering ACA plans in most of California. That will mean about 10% of people who get coverage through Covered California will need to find a new plan. All 11 health insurers will continue to offer at least some ACA plans in 2018.
Dive Insight:
The 12.5% increase prediction for California is actually less than what is expected nationwide. Oliver Wyman recently said ACA plan rates will increase by 20% next year, which is similar to the 22% increase in 2017. The increases stem from uncertainty surrounding the CSR payments.
Trump has threatened on multiple occasions that he will stop CSR payments unless Congress passes a healthcare bill. The president said he will soon announce whether he'll fund the CSR payments. If he declines, a bipartisan effort on Capitol Hill may file legislation to pay the subsidies instead.
Payers, members of Congress and healthcare experts say Trump’s threats are destabilizing the ACA markets at a time when insurers have found their footing in the market and begun to make money on the ACA plans. Withholding the payments could lead to a death spiral in the market.
The issue is also playing out in the courts. California's insurance commissioner has said he plans to sue the Trump administration if CSRs are not paid. On Tuesday, a judge ruled that 16 attorneys general can help defend the subsidy payments in court.
The Kaiser Family Foundation said payers’ improved medical loss ratio was a sign that insurance companies have figured out how to cover the ACA plan member population. In fact, earlier predictions said 2018 rates were going to be much lower because of expected market stability.
However, healthcare discussion in Congress and President Trump's threats about CSR payments have caused much unease in the ACA market. On top of that is CMS Administrator Seema Verma, who has said the ACA “is failing.”
Major payers like Anthem, Aetna and Humana have pulled back or are completely out of ACA exchanges for 2018. There are now 19 counties in the U.S. that currently don't have any ACA option for next year. Most of those counties are in Nevada, with a few in Indiana and one in Ohio.
Ohio cut its number of so-called “bare counties” in half this week when the Ohio Department of Insurance announced that payers would cover 19 bare counties in the Buckeye State next year.
Payers in the exchanges have until the end of September to file a Qualified Health Plan contract, which is when we will know for sure which payers are participating and whether there are still any bare counties.