HARTFORD, CT — Insurance companies and Connecticut officials are watching Republican President Donald Trump’s Twitter feed for any indication that he will end Obamacare subsidies to insurers participating in the exchanges.
After repeal efforts failed, Trump’s party seems to be torn about whether to help destroy the Affordable Care Act’s individual marketplace by eliminating the cost-sharing reductions that go to insurance companies to help them offset the deductibles and co-insurance for lower income individuals.
Senate Health, Education, Labor and Pensions Chairman Lamar Alexander, a Republican from Tennessee, wants to hold hearings to stabilize the marketplace, while Senate Majority Leader Mitch McConnell ignored the issue of healthcare in his floor speeches this week.
What does all of this mean for the two insurance companies in Connecticut who submitted rates for 2018?
When Anthem Health Plans and ConnectiCare Benefits submitted their double-digit rate requests to the Insurance Department in May, they both warned that the rates assumed the cost sharing reductions would continue.
If the cost-sharing reductions go away, Tu Nguyen, director and actuary for Anthem Health Plans, said “Anthem likely will have no choice but to re-evaluate this filing which could include requests for additional rate increases, elimination of certain product offerings, or the exiting of certain individual ACA compliant markets altogether.”
Neil S. Kelsey, vice president of actuarial services for ConnectiCare Benefits, said given the uncertainty of the current regulatory environment the company “reserves the right to withdraw its products from the individual market or request a change to all, or any portion, of these rate filings, if it determines, in its sole discretion that a change in the current regulatory environment is likely to pose an actual or potential material adverse risk to CBI’s business.”
Kim Kann, corporate communications director for ConnectiCare, said Wednesday that they are still “closely monitoring developments,” but none of the uncertainty outlined in May by Kelsey has changed.
“There are many questions about who will be covered, what benefits will be required, and what subsidies and other financial support will be available to our members,” Kann said.
About 40,000 of the 98,000 individuals enrolled in Connecticut’s exchange qualify for cost-sharing reductions (CSR) and 25 percent are qualified for advanced premium tax credits. About 25 percent are receiving no financial assistance.
Insurance companies are paid one month in advance by the federal government for what it anticipates the spending will be for the CSR customers. The payments are then reconciled at the end of the year.
Connecticut insurance carriers receive about $40 million to $50 million per year in cost-sharing reduction payments, James Wadleigh, CEO of Access Health CT, said.
Ann Lopes, carrier product manager for Access Health CT, said if the CSRs disappear, “it’s likely insurers who are participating in the individual marketplace are going to increase rates.”
There’s also the possibility that the insurance carriers could decide not to participate at all.
Insurance Department Commissioner Katharine Wade said if the CSR payments stopped they would ask the two carriers to resubmit their rates for review.
Wade said she hopes the CSR issue will be resolved in the next couple of weeks.
Ideally, the Insurance Department would like to set the 2018 rates by Sept. 1, but would push that off until Sept. 30 if there wasn’t enough clarity around the issue to make a decision.
“Our hope is we will be able to make decisions by the end of this month,” Wade said.
Robert Tessier, vice president of the Access Health CT board, said he’s troubled by “hope playing such a central role in this process.”
Wadleigh said there is a real chance that the two insurance companies currently participating through Access Health CT will leave the exchange’s individual marketplace.
“This would have a dramatic impact on our state budget, our healthcare system and most important, the people we serve,” Wadleigh added.
In order to save the ACA exchanges there’s a few things the federal government could do.
They could pay the cost-sharing reductions, enforce the penalty people are supposed to pay if they choose not to purchase insurance, or create a “national reinsurance pool,” Wadleigh said.
Those three things could help stabilize the individual marketplace, according to Wadleigh.
There’s also the possibility Trump could end the CSRs this year, which means insurance carriers would have to take a loss that they would be unable to make up through next year’s rates.
The next round of federal CSR payments to insurers are expected to be made on Aug. 21.