Insurance market

Monday, May 01, 2017 12:19 PM

Time is short for critical action to stabilize individual market

by Kate Alfano, CMS Communications Coordinator

Vital funding that reduces the costs borne by 7 million Americans who purchase coverage through the health insurance exchanges will soon be endangered if Congress and the Trump administration do not act quickly to ensure it continues to be available to the low- and moderate-income patients who need it.

There is great uncertainty surrounding these cost-sharing reductions (CSRs), which 60 percent of individuals who buy coverage through the health insurance exchanges rely upon to help with deductibles, co-payments or out-of-pocket limits. The payments are the subject of a lawsuit filed by members of Congress in 2014, put on hold after the 2016 presidential election, and still pending in the federal courts until at least the end of May, days before insurers must file their insurance plans for 2018.

Two high-profile letters have been sent to federal elected officials asking for this funding to continue. On April 12, the American Medical Association and seven other organizations representing physicians, hospital systems, insurers and businesses wrote to the Trump administration and congressional leaders to encourage them to stabilize the individual market for 2017 and 2018 by removing uncertainty about continued funding for CSRs. In addition to the AMA, the signatories were America’s Health Insurance Plans, the American Academy of Family Physicians, American Hospital Association, American Benefits Council, Blue Cross Blue Shield Association, Federation of American Hospitals and U.S. Chamber of Commerce.

And on April 20, Colorado Insurance Commissioner Marguerite Salazar sent a letter to Colorado’s congressional delegation with a similar ask, saying that uncertainty is “making everyone nervous” and that “this uncertainty is going to hurt Colorado consumers.”

“Uncertainty about the regulatory environment may cause carriers to raise premiums,” Salazar wrote in her letter. “If the CSRs are not funded, at a minimum, Coloradans are estimated to see a 12-19 percent rate increase for that alone. At the worst, carriers could decide to forgo the increased risk and simply exit the individual market in Colorado, leaving consumers with fewer choices in carriers and plans. Using the CSRs as a bargaining chip is tantamount to gambling with Coloradans’ access to health care.”

The funding covers consumers who earn less than 250 percent of the federal poverty level, and “Americans will be dramatically impacted” if cost-sharing reductions end, the AMA and other organizations stated in their letter. The likely outcomes include fewer choices for health insurance consumers and higher premiums in 2018 and beyond.

Analysts have estimated that the loss of cost-sharing reductions would raise premiums for all consumers in the individual market by at least 15 percent, regardless of whether they buy coverage through the exchange marketplace. “Higher premium rates could drive out of the market those middle-income individuals who are not eligible for tax credits,” the AMA stated.

The AMA continued: Providers will experience more uncompensated care, further straining their ability to meet the needs of their communities and raising costs for everyone – including employers who sponsor group health plans for employees.

Taking steps to strengthen and stabilize the individual insurance market is one of the nine objectives guiding the AMA’s health care reform discussions with the administration and Congress. The AMA supports measures to maximize the number of people, including healthy Americans, who sign up for coverage on the individual market.