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With open enrollment nearing, Iowa’s individual insurance market still rocky

Aug 07, 2017

By Chelsea Keenan, The Gazette

Erin Murphy, Gazette-Lee Des Moines Bureau

 

With health care talks in Washington, D.C., now stalled and the start of open enrollment only three months away, many unknowns still exist when it comes to the stability of Iowa’s individual insurance market.

The future of cost-sharing reduction payments are uncertain — which could translate to an increase in insurance premiums for Iowans between 52 percent and 57 percent — while the plan submitted by Iowa’s insurance commissioner intended to stabilize the marketplace still is waiting for approval.

Cost-sharing reductions, or CSRs, are federal payments made to insurers set up through the Affordable Care Act. The payments help cover costs for low-income individuals enrolled in an ACA silver plan.

The costs of these payments were at $7 billion in fiscal year 2017 and could hit $10 billion in 2018 and $16 billion by 2027, according to estimates by the Congressional Budget Office.

However, recent comments made by President Donald Trump have put the future of those payments into question.

“If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!,” he wrote on Twitter earlier this week.

And then the next day, he added, “If Obamacare is hurting people, & it is, why shouldn’t it hurt the insurance companies & why should Congress not be paying what public pays?”

The problem with that logic? If those payments stop, insurers either will drop out of the individual market altogether or be forced to increase rates to cover the costs. In Iowa, that means Minnesota-based Medica — the only remaining insurer selling individual plans on the exchange statewide — could increase rates an additional nine to 14 percent.

That’s on top of the 43 percent increase it already is seeking.

“The ACA requires insurers to sell silver-level products to people at lower incomes where those individuals get additional support to pay out-of-pocket costs,” Geoff Bartsh, vice president for individual and family business at Medica, explained during a telephone interview Thursday. “For instance, if there’s a silver plan with a $4,000 deductible, for people at 200 percent of the poverty line or below, we’d offer a $2,000 deductible.

“That difference in what the member pays out-of-pocket is paid for by the federal government. We still have to offer those products, the government says we do. The thing in question is, whether or not they pay the insurance company what they (the government) owe us. If we don’t get that money they owe us, we have to go back and adjust premiums.”

In Iowa, about 20,000 people qualify for cost-sharing reductions, which translates to about $65 million worth of payments to insurers, Bartsh said. Iowa is better positioned than other states, he added, because it chose to expand Medicaid to low-income adults.

For example, in Nebraska, where Medica also operates but which didn’t expand Medicaid, the state receives about $100 million in cost-sharing reduction payments, despite having about 1 million fewer people than Iowa. That means Nebraska’s premiums could go up higher than Iowa’s if cost-sharing reduction payments disappear.

The future of cost-sharing reductions always have been in question, Bartsh said, explaining that the U.S. House of Representatives sued the U.S. Department of Health and Human Services Secretary under President Barack Obama.

That suit challenged the legality of making the cost-sharing reduction payments without an explicit appropriation, according to Kaiser Family Foundation, and a District Court judge ruled in favor of the House. The ruling was appealed and payments were permitted to continue pending the appeal.

Medica and other insurers have paid close attention to the almost dizzying number of health care plans and health care votes to repeal and replace the ACA coming out of Washington, D.C. But that, for the most part, has just been noise, Bartsh said.

“The issue with CSRs is it’s not just noise,” he added. “It’s already an immediate issue that we’re looking at on a month-by-month basis with the administration saying it won’t fund this. This has crossed over from noise to reality.”

Most Iowa customers qualify for subsidies — which are separate from the cost-sharing reductions — and increase as the price of premiums increase. But those who don’t will feel “the full weight of the additional Trump tax,” Bartsh said.

‘A GOOD STORY TO TELL’

Meanwhile, Iowa officials are continuing to work with the federal government to get approval for a stopgap plan designed to stabilize the state’s individual insurance market.

State insurance Commissioner Doug Ommen said he and his staff hold weekly phone discussions with the federal health department about Ommen’s stopgap plan, which requires federal approval because it involves federal funding.

Ommen characterized the discussions as “constructive.”

“I think we continue to be hopeful that we can get approval,” Ommen said.

Ommen’s stopgap plan redirects federal funding for premium assistance into defined contribution premium assistance, calls for federally funded age- and income-based tax credits, allows open enrollment for 2018 and a 12-month continuous coverage requirement in most special enrollment periods, and creates a federally funded, high-risk reinsurance program to support Iowans with chronic, high-cost health conditions.

Ommen said he believes the stopgap plan will encourage more young and healthy Iowans to purchase insurance and draw more insurance companies into the marketplace. The state’s largest insurer, Wellmark Blue Cross and Blue Shield, which pulled out of the individual insurance market in April, has said it again would offer plans if the proposal is approved.

Ommen said he would not predict whether the federal government will OK the plan.

“I think we have a good story to tell to Washington, D.C. I think the stopgap plan is better,” Ommen said. “They are looking at what’s happening here and they are very aware of what this will mean to thousands of Iowans.”

Of the handful of other states that have requested Affordable Care Act waivers, Iowa’s stopgap plan is unique, said Jennifer Tolbert, director of state health care reform for the Kaiser Family Foundation, a not-for-profit organization dedicated to covering health care issues.

“Iowa’s goes a step further,” Tolbert said. “There are also changes to the plans that would be offered in 2018 under the waiver, and then fundamental changes to the premium tax credits, the structure of the tax credits, and the cost-sharing reductions that are currently available to consumers.”

Tolbert said it is difficult to determine whether the federal government will approve a plan with such significant changes to the current health care law.

“But what I can say, though, is certainly there is support for the reinsurance component of the stopgap measure,” Tolbert said, pointing to federal approval of a waiver request from Alaska that featured a reinsurance plan, and a letter of support from U.S. Health and Human Services Secretary Tom Price.

“The administration has also signaled increased flexibility in terms of state waivers. Now, how far they will go and whether they will decide to approve (Iowa’s) waiver, I think, still is very much an open question.”

The federal government’s decision could have an impact on other states that may be looking to personalize the federal health care law.

“If the administration approves this waiver, it would signal, I think, to other states perhaps a willingness to entertain waivers that would change the structure of the tax credits and the subsidies that are available to customers,” Tolbert said.

The reinsurance piece of Iowa’s stopgap plan has bipartisan support among federal legislators.

Democrats have called for a national reinsurance plan to help cover high-cost patients and bring down overall premium costs. In the U.S. House, 52 Democrats signed a letter to Republican Speaker Paul Ryan urging him to take steps to improve the federal health care law; the first step was a reinsurance program.

“This idea of a reinsurance program and the need for it certainly has resurfaced,” Tolbert said, noting a reinsurance provision was included in both health care bills recently proposed by Republicans in the U.S. House and Senate.

“It’s now being put forward by Democrats in both the House and Senate as a possible potion and a strategy for shoring up these markets,” Tolbert said.

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