Anyone searching for an example of how the Trump administration could affect future healthcare costs has a prime example in North Carolina.
The uncertainty of whether the administration will fund federal cost-sharing payments led Blue Cross Blue Shield of N.C. on Thursday to offer two premium increase scenarios for the 2018 individual marketplace exchange.
The first is a 22.9 percent hike predicated on the White House choosing not to fund the payments, which serve as subsidies to help lower-income individuals buy plans with reduced out-of-pocket costs for medical care, such as lower deductibles and co-payments.
The second scenario is an 8.8 percent premium increase with the cost-sharing payments funded.
Republicans have sued the Obama administration to stop the subsidies, with that case tied up in court.
The rate increase request was submitted last week to the N.C. Insurance Department, which typically has 90 days to conduct a review. There will be a shorter open enrollment period between Nov. 1 and Dec. 15.
For 2017, 67 percent of Blue Cross Blue Shield of N.C.’s individual exchange customers, or about 335,000, receive the payments.
One example of the ramifications of ending the payments: For the Blue Advantage silver plan, by far the most popular choice for enrollees in 2017, the deductible would be $500 and the out-of-pocket maximum $5,000 with the payments intact.
However, without the payments, the deductible is $700, or 40 percent higher, and the out-of-pocket maximum is $7,150, or 43 percent higher.
“Many ACA customers will pay more for coverage that is already a large portion of their household income,” said Brian Tajlili, the insurer’s director of actuarial and pricing services.
“We are still required to offer the additional cost-sharing reduction benefits to participate in the exchange, so covering these costs without (the federal subsidies) will drive up our average rate for next year,” Tajlili said.
The N.C. Farm Bureau said federal reimbursements to insurers for extending subsidies are estimated to be more than $7 billion nationally.
Tajlili said that if the Trump administration provides more certainty about cost-sharing reduction payments, it could amend and re-file its request to reflect a lower rate increase.
Nationally, 58 percent of the 12.2 million individuals who have purchased ACA plans receive the payments, according to the Kaiser Family Foundation.
On March 1, Blue Cross reported a $38 million loss on ACA-related patient care for 2016 when including federal reimbursements, compared with a $283 million loss in 2015 and $123 million loss in 2014.
Most ACA-related losses reflect enrollees being older and sicker. They tend to require additional and higher-cost services, such as orthopedics, cardiology and cancer services, emergency room care and specialty drugs.
Insurers ‘in a real bind’
President Trump has said his indecision on the cost-sharing payments is strategic in part in hopes of using them as leverage to get Senate Democrats to support the American Health Care Act.
“It’s unfortunate that the Trump administration and Congress have chosen to create so much uncertainty about continuing legally mandated payments,” said Mark Hall, a law professor at Wake Forest University who is a national expert on health care.
“That uncertainty puts insurers, like Blue Cross, in a real bind: either they set their prices for next year based on the assumption that the payments will continue, but risk having to either cancel coverage or impose substantial mid-year increases.
“Or, they go ahead and price their products assuming these payments cease, which results in a rate increase that is almost three times what it would otherwise be.”
The Kaiser foundation said in an April 6 report that the average ACA premium increase would be 19 percent nationally without the cost-sharing payments. That represents an average 15 percent increase for the 31 states that expanded their state Medicaid program, and a 21 percent increase for the 19 states, such as North Carolina, which haven’t.
The Blue Cross premium increase of 22.9 percent, factoring in no payments, is nearly 3 percent higher than the foundation projected for N.C.
Blue Cross said it plans, but with no guarantee, that it will provide a choice of up to 18 ACA plans in every county. Cigna HealthCare of N.C. has filed for a 31.9 percent rate increase to cover a projected 21,396 customers in five Triangle counties.
“The undecided future of the ACA makes it hard for insurance companies to prepare for 2018, and could impact whether or not Blue Cross NC can offer plans,” Tajlili said.
‘Will decimate family budgets’
Lobbyists for the health insurance industry, American Medical Association, American Hospital Association and U.S. Chamber of Commerce have asked Trump and congressional Republicans to fully fund ACA subsidies.
American Bridge, a health insurance consumer advocacy group, calls the Trump administration’s indecision on the cost-sharing payments an example of “overtly sabotaging insurance markets as he pushes Trumpcare on the country, and it’s now costing North Carolina.”
American Bridge considers itself as a "progressive political organization and political action committee."
Larry Wooten, president of N.C. Farm Bureau, said health insurers are concerned about the Trump administration’s indecision over whether they will get federal reimbursements for paying to extend subsidies to eligible customers.
“There’s no way around the fact that another double-digit increase will decimate family budgets,” Wooten said.
“(Blue Cross’) announcement demonstrates that the American people will continue to suffer the most if there is not stability in the insurance marketplace and meaningful reform.”
Wooten said that as long as the ACA remains the law of the land, “despite the obvious shortcomings ... the federal government should obey the law.”
“By failing to live up to their end of the bargain, politicians in Washington are destabilizing the marketplace, which sows fear and confusion among their constituents,” Wooten said. “I urge them to keep their promise to the American people and honor their commitment under the current law.”
Mitch Kokai, policy analyst with Libertarian think tank John Locke Foundation, called it interesting that ACA supporters “are trying to shift blame for rate increases to the Trump administration” since insurers raised rates before Trump was elected.
“One of the reasons many people supported Trump was because of his promise to get rid of the ACA,” Kokai said. “Trying to shift the blame to the Trump administration takes a lot of chutzpah.”
Liz Gallops, past president of N.C. Association of Health Underwriters, said the Blue Cross premium hike proposal “further demonstrates the need for strategic and comprehensive reform in order to preserve the individual health insurance market in North Carolina.”
“With the current legislative unknowns in Washington and pending litigation surrounding ACA, it is not reasonable to think insurance companies can properly plan and predict health-care costs for 2018. Until the cost of health care is addressed, the cost and mechanism by which we pay for healthcare will only continue to increase.”
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