CSR funding likely will be tucked into a federal funding bill this spring, a health policy adviser says. 

April 13—Two major hospital advocacy groups joined other healthcare provider and health plan advocates this week to urge a quick decision on whether to continue out-of-pocket subsidies for insurance policies sold on government-run marketplaces.

The American Hospital Association and the Federation of American Hospitals joined five other major healthcare industry advocacy groups—plus the U.S. Chamber of Commerce—in a letter urging the Trump administration to take quick action.

“The most critical action to help stabilize the individual market for 2017 and 2018 is to remove uncertainty about continued funding for cost sharing reductions [CSRs],” they wrote.

Without a quick decision to continue providing the CSR payments for policies sold on the Affordable Care Act (ACA) marketplaces, more insurers are likely to leave the marketplaces, premiums will spike, providers will face higher uncompensated-care costs, and premium subsidies will increase, they wrote.

The Trump administration this week disputed a New York Times report that it had decided to continue the subsidies, the legality of which was successfully challenged by the House of Representatives after the Obama administration used non-appropriated money to fund them. The case, House v. Price (formerly House v. Burwell), is under appeal.

The administration’s lack of a decision has clouded the outlook for insurers given that 32 percent, or 5.7 million, of the 18 million enrolled in individual health insurance received a total of $5.7 billion in subsidies in 2016, according to a Milliman report.

“It is totally unclear” whether the CSR payments will continue, Ceci Connolly, president and CEO of the Alliance of Community Health Plans (ACHP), said in an interview. “Unfortunately, mixed messages coming out of the administration make it very hard for even the most committed plans to lock for 2018 with such enormous uncertainty.”

Plans need to know the administration’s decision regarding CSR payments within five weeks because most states have June 21 rate-filing deadlines for 2018 coverage, Connolly said.

“We’re pricing right now, as we speak, for these policies,” said Karen Bender, president at Snowway Actuarial and Healthcare Consulting. “And if the cost-sharing reduction subsidies or those payments are not going to be made to the insurers, we have to build that into our premiums right now as we speak.”

Healthcare policy advisers from across the ideological spectrum agreed that the CSR payments should continue while the Trump administration and congressional Republicans consider whether to renew efforts to repeal and replace part of the ACA. The withdrawn American Health Care Act (AHCA) would have funded CSRs in 2018 and 2019.

“Insurers have to have some idea of what they’re going to see in 2018,” said Chris Holt, director of healthcare policy at the American Action Forum. “And the opportunity to give them that certainty is fast closing. Congress needs to figure out a way to allocate funds for CSRs in 2018. And then everything becomes about 2019, if there’s still enough insurers participating by then.”

The dissipating number of insurers in the ACA marketplaces was highlighted in a recent tabulation by Axios, which found that 69 insurers left ACA marketplaces in 25 states in 2017. About one-third of counties and five states have only one insurer in their 2017 ACA marketplace, according to the Trump administration. The challenge is even larger in rural areas, where 41 percent of marketplace enrollees have access to only a single insurer, according to a post by the National Rural Health Association.

“When all the sturm and drang is over, [CSR funding will] wind up as an item tucked into the omnibus or whatever they do to fund the government,” said Ed Haislmaier, a senior research fellow at the Heritage Foundation, referring to a funding bill expected to pass later in the spring.

If CSRs Are Discontinued

If CSR payments do not continue, insurer decisions on whether to leave the marketplaces or stay and hike their premiums in response likely will vary by market and by ACHP member plan, a group that includes provider-sponsored plans, according to Connolly. Her members estimate premiums would need to increase by between 7 percent and 21 percent to compensate for the loss of CSR payments.

“Some will say this gives us that additional factor of uncertainty; we just won’t play,” said Peter Lee, executive director of Covered California.

In an April 5 letter, ACHP urged congressional leaders to appropriate the needed CSR funding, and Connolly said her discussions with members of Congress have been “constructive.” But she worried that quick congressional appropriation of the CSR funds would be complicated by the tight time frame and the lack of coordination with the Trump administration, which has discussed using the payments as leverage to draw Democrats into a discussion about overhauling the ACA.

The CSR payments also could continue if congressional Republicans drop their lawsuit, but that looks unlikely.

Are CSRs Enough?

Whether affirmative action to continue the CSR payments is enough to stabilize the ACA marketplaces also is a market-specific and insurer-specific question, Connolly said.

The Trump administration’s market stabilization plan, which was finalized April 13, should help. Other changes that insurers have urged include strengthening the risk adjustment program.

“Each of these becomes a positive step,” Connolly said.

Lee said the Trump administration needs to enforce the individual mandate penalty, but it stopped requiring people to attest to their coverage in their 2016 tax forms.

“I know [the penalty] sticks in the craw, but to not do that, health plans will price for it,” Lee said. He also urged provision of additional risk stability funding, such as the $15 billion proposed in the AHCA.

That “would show that if we can’t repeal and replace in six weeks, we at least aren’t going to let things collapse,” Lee said.

The CSR payments may help bolster plans that participate in the non-ACA marketplace, which has neither CSR payments nor premium subsidies available to enrollees but which shares the risk pool with ACA marketplace plans. However, CSR payments won’t directly help the non-ACA marketplaces, which cover many of the 10 million people who have individual health insurance plans and who don’t get premium or CSR subsidies—and some policy advisers see worrying signs among those marketplaces.

“That’s the one where we are in the early, but disturbing, phase of a crisis,” Haislmaier said.

He cited the recent departure of Wellmark from the non-ACA marketplaces in South Dakota and Iowa.

“For that 10 million that’s nonsubsidized, none of that has changed except their premiums have gone through the roof,” Haislmaier said.

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

Publication Date: Thursday, April 13, 2017