High anxiety for insurers on ObamaCare deadline

Insurers are grappling with a serious predicament in finalizing how much their health plans will cost, even after a three-week extension from the Trump administration.

The new Sept. 5 deadline gives carriers more time to tweak their premiums for in a year where uncertainty surrounding the law has reached a new high.

But even as the Trump administration gave insurers more time, it failed to answer the central question insurers are asking: namely, whether they will continue to receive key payments from the federal government.

“It’s helpful, yes,” Jon Godfread, North Dakota’s insurance commissioner, said Friday of the delay. “But at the same time, it’s an answer to a question we’re not asking right now. We’re asking are [cost-sharing reduction payments] going to be funded; are they not? Give us a definitive answer, and we still don’t have that.”

No one knows how the Trump administration will manage ObamaCare, which makes it exceedingly difficult for insurers to price their plans. Unless they receive answers soon, sources said, insurers would be in the same position come Sept. 5. 

Carriers have been pleading for certainty that the federal government will continue cost-sharing reduction payments (CSRs), which compensate insurers for subsidizing the out-of-pocket costs of certain enrollees.

“They can keep pushing this back as long as they want,” Chris Sloan, a senior manager with the consulting firm Avalere Health, said. “But until health plans know whether CSRs are going to be available in 2018 or not, they can’t have confidence that they’re pricing their products correctly.”

In a memo on Thursday, the Centers for Medicare and Medicaid Services (CMS) detailed changes to the risk adjustment methodology and changes to the deadlines for insurers. According to a CMS spokesperson, the agency is providing clarity and more time to account for recent rating practices at the behest of state insurance departments and issuers.  

But the memo didn’t say how long cost-sharing reduction payments would be funded, instead stating “there have been no changes regarding HHS’s ability to make cost-sharing reduction payments to issuers.”

The administration has been funding the payments on a monthly basis, but President Trump has indicated he may end them. It’s possible an announcement could come before Sept. 5.

By Aug. 20, the Trump administration has to decide if it wants to continue appealing a verdict against the administration on the payments; if it decides not to appeal, the payments could end. The case has been put on hold for months, and it’s possible a decision could again be delayed.

In the meantime, state officials are doing their best to prepare for the next enrollment season.

Teresa Miller, Pennsylvania’s insurance commissioner, said the new deadline “will give us more time to lobby the federal government to give the market certainty. A little more time will give us time to explain further how critical it is to get assistance to get the market to stabilize.”

She added: “The mantra from the president about ObamaCare failing isn’t true for Pennsylvania. On its own this market is stabilizing.”

The Senate Health Committee is trying to help out by seeking to craft a bipartisan, short-term stabilization bill by mid-September, with hearings beginning the first week of the month.

“I am heartened by the fact that Sen. [Lamar] Alexander [R-Tenn.] is willing to hold hearings and that both Republicans and Democrats have expressed an interest in trying to deal with a short-term problem, which is the stabilization of the market,” Marilyn Tavenner, America’s Health Insurance Plans CEO and president, said in early August on Marketplace, a radio show. 

But the window for a deal — and for the bill to pass both chambers and get Trump’s signature — is tight, as insurers participating in must sign their final contracts Sept. 27.

By then, insurers want certainty on whether CSRs will be paid and also if the administration will enforce ObamaCare’s individual mandate. Failing to do either thing, they say, would force them to jack up premiums or leave the system altogether. 

Republicans are adamant that ObamaCare is failing, saying premiums have skyrocketed and insurance options have declined because of the law. 

The Department of Health and Human Services (HHS) pointed to premium hikes last year on the exchanges, saying premiums increased by 25 percent.

“Since Obamacare went into effect under the previous administration, skyrocketing healthcare costs and fewer choices have become the norm,” HHS spokeswoman Alleigh Marré said in a statement.

Marré added that the Trump administration is “committed to repealing and replacing Obamacare and will always be focused on putting patients, families, and doctors, not Washington, in charge of healthcare.”

But despite the administration’s opposition to the law, open enrollment in the healthcare marketplaces is scheduled to begin on Nov. 1. 

As a result of the uncertainty, some states — such as California — have asked carriers to file two sets of initial rates, one of them typically a larger premium hike that included a discontinuation of the payments to insurers.

Some insurers simply factored in the uncertain environment into one request in their initial filing. Others didn’t, but warned their premiums could be higher or they could leave the marketplace, depending on what the Trump administration does.

The deadline extension buys more time for the carriers who didn’t initially prepare rates assuming CSRs were discontinued, Godfread said.

A Kaiser Family Foundation analysis released Thursday showed initial premium requests varied widely, from a 5 percent decrease in Providence, R.I., to a 49 percent jump in Wilmington, Del. 

Molina Healthcare of New Mexico requested an average 21 percent rate increase, and of that, 11 percent was because it assumed the individual mandate was weakly enforced.

PacificSource Health Plans filed an initial 45.6 percent rate increase; it said 23.2 percent of the increase was due to uncertainty over cost-sharing reduction payments, according to Kaiser.

Regardless of the uncertainty, premium increases were likely still be necessary in some areas for 2018, according to Cynthia Cox, associate director for Kaiser’s Program for the Study of Health Reform and Private Insurance. 

She mainly attributed that to insurers having set premiums too low in 2014 — the year the exchanges opened for business — and because some health marketplaces have seen a fair number of sick enrollees.

“But if the Trump administration had been more clear about what the rules were going to be for next year, we would likely would have seen much smaller premium increases,” she said. 

Nathaniel Weixel contributed.

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