The Trump administration regularly will wait until a couple days before each scheduled CSR payment before announcing plans to continue the payments, a federal healthcare policy analyst predicted.

Aug. 10—Fifteen of 21 major markets for government-run health insurance exchanges expect to see double-digit premium increases on average in 2018, according to preliminary filings as reported in a new analysis.

The proposed increases for plans sold in the individual marketplaces created by the Affordable Care Act (ACA) were exacerbated by uncertainty surrounding cost-sharing reduction payments (CSRs) and enforcement of the individual mandate, according to the Kaiser Family Foundation (KFF) analysis. But the filings show the premium increases would be substantial even without policy uncertainty—contrary to the expectation of some that average premium increases of 25 percent for 2017 would be a onetime event.

Overall, the change in benchmark silver premiums will likely range from a 5 percent reduction to a 49 percent increase across the 21 major cities in the analysis.

The KFF report emphasized the impact of policy uncertainty in exacerbating the rate increases for the plans it examined, such as in the case of a 12.4 percent average additional premium hike that insurers in California’s ACA marketplace said they would add if CSR payments were not made. But that regulatory “surcharge” would come on top of a 12.5 percent increase.

Similarly steep increases—even before accounting for the regulatory impact—were identified by many individual insurers, including Highmark BCBS of Delaware, which sought a 20.8 percent increase before adding 12.8 percent over uncertainty about CSRs and enforcement of the individual mandate.

The pre-regulatory increases were as stark at the statewide level, where 15 of the 21 states that have reported their ACA filings had weighed average increases in the double digits, according to datatracked by ACAsignups.net. Those rates further increased with the policy uncertainty. The analysis found that average statewide increases in the absence of regulatory uncertainty would range from 5.6 percent in Vermont to 29.2 percent in Georgia. When regulatory uncertainty was included, increases would range from 11.1 percent in Vermont to 52.2 percent in Georgia.

Average Silver-level plan increases were only 7.5 percent in 2016 and 2 percent in 2015. Some expected the 2017 increases to be a onetime surge stemming from the scheduled expiration of two of the ACA’s financial-backstop programs for insurers and the availability of more-complete enrollee cost data compared with the first three years of enrollment.

For instance, a December report by Standard and Poor's Global Ratings concluded that the 2017 premium hikes were a “onetime pricing correction.”

“So although we would expect insurers, on average, to put in another round of premium increases for 2018, the average level of increase requested will be well below the 2017 hike of 25 percent,” the S&P report concluded.

Joseph Antos, a scholar at the American Enterprise Institute, was not surprised at the early signs that large premium hikes may be continuing in the ACA marketplaces.

“This is a market that would inevitably have a much higher rate of premium increase from year to year even when it’s normal and even with [CSRs] and everything else and even with Obamacare working as well as it possibly could,” Antos said in an interview.

Antos attributed the likelihood of continued substantial increases to the structure of the ACA marketplaces, which attract enrollees who are sicker and which rarely penalize enrollees who drop coverage rather than paying for costly coverage that they recently obtained.

“On the whole, it wasn’t vigorously enforced in the sense of going out there and beating the bushes to find scofflaws and having them pay some sort of a fine,” Antos said.

Lax mandate enforcement—long cited as a concern by insurers—appears to be more of an ongoing issue than a new problem created by the Trump administration, Antos noted.

CSR Outlook

Antos has little confidence that a growing number of legislative efforts in Congress to permanently or temporarily appropriate the CSR payments will succeed this year. Legislative appropriation is required, a federal judge ruled when the House of Representatives challenged CSR payments made administratively by the Obama administration.

Instead, Antos expects the Trump administration to regularly wait until a couple days before each scheduled CSR payment before announcing that the payments will continue.

“The de facto policy will be that they will make the payment every month until there is some resolution, either through an appropriation in the Congress or if there is some action in that court case that forces something to happen,” Antos said.

The federal case challenging CSR payments is under appeal.

Enrollment Impacts

The KFF analysis authors thought the 2018 premium increases could further erode enrollment in ACA marketplace plans.

“Although the individual market on average has been stabilizing, the concern remains that another year of steep premium increases could cause healthy people (particularly those buying off-exchange) to drop their coverage, potentially leading to further rate hikes or insurer exits,” the analysis stated.

Although 12.2 million people enrolled in an ACA marketplace plan during the 2017 open-enrollment period, only 10.3 million  paid their premiums and had an active policy as of March 15, according to a reportby the Centers for Medicare & Medicaid Services. The year-over-year drop of 600,000 was driven by enrollees who did not qualify for premium or CSR subsidies.

Such slippage could be even more serious in the off-exchange insurance marketplace.

For instance, a Mark Farrah Associates analysisfound that ACA and off-exchange individual-market enrollment in March totaled 17.6 million—a decrease of 2.6 million, or 12 percent, from March 2016.

“My concern is the extent that the ACA has been spilling onto the off-exchange market, damaging the market,” said Ed Haislmaier, a healthcare policy analyst at The Heritage Foundation. “The question for policymakers is, ‘Which market are you trying to save?’”

Permanently appropriating CSR payments will do nothing to bolster the off-exchange markets, Haislmaier said in an interview. And Republican-led reforms that would have authorized broad flexibility for states to change the rules for insurers on and off the ACA marketplaces were rejected by the Senate.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, August 10, 2017