Florida health insurers are seeking double-digit rate hikes for 2018 Affordable Care Act coverage, but this week state regulators asked insurers to submit backup plans to raise premiums even higher next year because of uncertainty surrounding the future funding of subsidies that help low-income Americans pay their out-of-pocket costs.
The Office of Insurance Regulation said insurers need to account for the potential elimination of the subsidies, whose future funding has become an increasingly complex political question.
President Donald Trump has threatened to halt the payments, called cost-sharing reductions, in hopes of reviving congressional efforts to repeal and replace the health law known as Obamacare.
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But a bipartisan group of U.S. senators said Tuesday they are working on a bill that would continue the payments to Obamacare insurers through 2018, out of concern that stopping the subsidies will raise premiums for people who buy their own health insurance coverage on the ACA exchange at healthcare.gov.
And this week a federal appeals court in Washington, D.C., allowed a group of attorneys general from 17 states to intervene in a pending appeal of a lawsuit, House v. Price, whose outcome also could affect future funding of the payments.
“It’s a high-stakes gamble right now for some companies,” said Cynthia Cox, who conducts research on the ACA for the nonprofit Kaiser Family Foundation, a healthcare policy think tank.
“This political uncertainty is causing insurers to raise premiums much more than they otherwise would or to leave the market,” she added. “It’s creating a more destabilized market.”
Preliminary rate requests for 2018 ACA plans were published this week by federal healthcare regulators, with Florida insurers requesting premium increases ranging from one percent to as much as 44 percent.
The average increase requested by Florida insurers whose 2018 ACA plan rates were published this week is about 11.84 percent.
But those rates do not factor the loss of the cost-sharing subsidies. Florida’s insurance regulator has asked companies to file revised rates by Friday to account for that possibility, said Amy Bogner, a spokeswoman.
It’s a high-stakes gamble right now.
Cynthia Cox, Kaiser Family Foundation
The subsidies help eligible low-income Americans pay their out-of-pocket costs, such as deductibles and co-payments. They are paid directly to health insurers by the government on behalf of consumers who earn less than two-and-a-half times the federal poverty level, about $30,000 a year for an individual or $51,050 for a family of three.
More than 1 million people, or about 75 percent of the estimated 1.4 million Floridians with ACA plans in 2017, receive cost-sharing subsidies to reduce their out-of-pocket expenses, according to federal estimates.
Executives for Florida Blue, the state’s largest health insurer, said in June that without the subsidies the company would hike rates by an average of 20 percent for 2018. For next year, Florida Blue has requested rate hikes ranging from 9 to 24 percent that assume subsidies will be funded.
Douglas Bartel, a Florida Blue spokesman, declined to comment on the insurer’s rate requests but issued a written statement in support of continuing the subsidies in order to “maintain the affordability and stability” of the individual health insurance market.
“We hope their continued funding can be assured for our members,” Bartel said. “Without assurance or confidence that [subsidies] will be in place in either the short- or long-term, we may be forced to adjust our rate filings accordingly.”
In a conference call with investors this week, Molina Healthcare executives said they will raise premiums by an average of 55 percent in all states where the company sells ACA plans next year if the subsidies are not funded.
If the subsidies were to continue, then Molina’s average rate increase across the country would be about 30 percent, said Joseph White, chief financial officer and interim CEO. White said Molina is withdrawing from the Obamacare market in Utah and Wisconsin for 2018, and warned that the company might discontinue ACA plans in more states.
1,072,045 Floridians receiving cost-sharing reduction subsidies in 2017
In Florida, where White said the company had a disappointing financial quarter due to high hospitalization and pharmacy costs, Molina has asked for rate increases of 37 and 44 percent in 2018 — but that’s assuming the subsidies are funded.
Although six insurers will be selling individual ACA plans in Florida next year, the initial rate requests published this week by federal officials reflected premiums for only five companies: Blue Cross & Blue Shield of Florida (Florida Blue), Celtic Insurance Co. (Ambetter), Florida Health Care Plan, Health Options and Molina Healthcare of Florida.
Health First Commercial Plans also filed rate requests with Florida regulators to sell individual ACA plans in 2018, but those rates have yet to be published by federal officials. Insurers typically consider their initial rates trade secret, and do not publish them until after rates are finalized by state regulators on August 16.
Insurers then have until late September to sign contracts that commit them to offering ACA plans through 2018. Once insurers sign contracts, they’re locked into their rates for the entire year, Cox said.
Without a guarantee that subsidies will be covered through 2018, insurers are likely to seek precautions if they decide to remain in the ACA market.
“What we’re probably going to see is that insurers will put clauses into their contracts that if they get the rug pulled out from underneath them, they’ll exit,” Cox said.
Like the tax-credit subsidies that lower an eligible consumer’s monthly premium, the cost-sharing reductions are a key part of making insurance affordable for low-income Americans under Obamacare, said Allan Baumgarten, a health insurance analyst and publisher of the bi-annual Florida Health Market Review.
“Affordability has two components,” he said. “One is holding down the monthly premium. but the other one is helping with the cost sharing, and if that help with cost sharing is not available, that’s the sort of thing that can lead to people dropping coverage.”
The consumers most likely to drop their coverage would be younger and healthier ones who feel they do not need health insurance, Baumgarten said, which could further destabilize the individual insurance market by leaving mostly older and less healthy consumers who use more healthcare.
The result would be that more insurers retreat from the ACA markets, leaving more counties with no insurers.
Said Cox: “No one wins when the insurance company leaves the market.”
Average Rate Requests for 2018 ACA Individual Plans
- Florida Blue, 16.6 percent
- Celtic Insurance (Ambetter), 11.8 percent
- Florida Health Care Plan, 10.14 percent
- Health Options, 8.75 percent
- Molina Healthcare of Florida, 40.1 percent