Colorado Moving to Protect Unsubsidized Obamacare Enrollees

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Sara Hansard Washington Reporter Brian Broderick Washington Editor

By Sara Hansard

Colorado is changing the way it will calculate 2019 Obamacare premiums as a result of the federal government not funding out-of-pocket payments for low-income people.

But many other states are still sitting on the sidelines rather than change the way they cover Affordable Care Act cost-sharing reductions (CSRs)—government payments to insurers to help people pay out-of-pocket costs. Congress didn’t include funding for the CSRs or other market stabilization provisions in the spending bill signed into law March 23.

President Donald Trump stopped federal funding of the CSRs in October 2017 because Congress hasn’t appropriated the funding, leaving health insurers on the hook. In most states, insurers have been directed or allowed to add the cost of the lost funding to the price of silver tier exchange plans, which reduced at least some of the premium increases for people who didn’t receive subsidies for 2018. Ending the CSR reimbursements is projected to cost insurers $8 billion in 2018, according to the Georgetown University Center on Health Insurance Reforms (CHIR).

How CSRs Affect Premium Subsidies

ACA premium tax credits are based on the second-lowest-cost silver plans in the exchanges, so adding the cost of the CSRs to silver exchange plans increases the amount of subsidies the federal government must pay for enrollees with incomes between 100 percent and 400 percent of the federal poverty level. In 2017, the CBO estimated that not funding the CSRs would add about 20 percent to 2018 premiums for single ACA policies before premium tax credits were taken into account.

As a result of the higher premium tax credits, many subsidized Obamacare enrollees have been able to buy gold-tier plans that cover more for the same price as what silver tier plans would have cost, or they have been able to get lower-value bronze-tier plans for nothing.

In 30 states, insurers raised premiums for silver plans only in 2018, the Georgetown University blog found.

“Silver loading, especially when it’s done for on-exchange plans only, protects people who are eligible for premium subsidies,” American Academy of Actuaries senior health fellow Cori Uccello told Bloomberg Law March 23. People who make too much money for subsidies are also protected from higher premium increases when the cost of the CSRs is loaded only onto silver plans on the exchanges, she said.

Colorado Changing Directions

For 2018 exchange plans in Colorado CSR adjustments were made across all plans, both on and off the exchanges, according to the CHIR.

Premiums in Colorado’s individual market, both on and off of Colorado’s exchange, increased 34 percent on average in 2018, Colorado Division of Insurance (DOI) spokesman Vincent Plymell told Bloomberg Law in an email March 22.

But for 2019, the Colorado DOI will require carriers to load the cost of the CSRs onto exchange silver plans, Plymell said. The state doesn’t have an estimate for the impact of silver-loading for 2019, he said.

Other states took different actions, according to the CHIR report. In eight states, some of the insurers spread the CSR-related premium increases across all silver plans, in and out of the marketplaces. In nine states some insurers spread CSR-related premium increases among the different metal tiers, resulting in higher increases for unsubsidized consumers. Some of those states overlap because insurers adopted multiple strategies.

Action in Other States Not Clear

It isn’t clear yet what actions will be taken in states that haven’t already loaded the cost of the CSRs onto exchange silver plans.

In Oklahoma, where the federal government conducts rate reviews, the state’s primary carrier, Blue Cross and Blue Shield of Oklahoma (BCBSOK), has been allowed to include the cost of the CSRs in its rates in both 2017 and 2018, according to Mike Rhoads, deputy commissioner of the state Department of Insurance.

The 2017 rates were reviewed by the Obama administration in 2016, before the CSR payments to insurers were ended by the Trump administration. That meant BCBSOK was able to raise premiums to cover the CSRs even when they were receiving the payments from the federal government.

“They were double-dipping,” Rhoads said.

However, “With only one issuer willing to continue to take the risk of writing this business and given the great uncertainty of the continuation of CSR payments by the federal government during this period, it is reasonable for the two parties (CMS and BCBSOK) to agree to the arrangement,” Rhoads said in an email to Bloomberg Law March 23.

Oklahoma’s premium increase for 2018 was only 8 percent, one of the lowest in the nation, Rhoads said. Rate increases in other states were frequently in the double digits for 2018.

Company’s Statement

“Blue Cross Blue Shield of Oklahoma accounted for the uncertainty surrounding the federal government’s funding of the members’ cost sharing reduction benefit in our 2017 and 2018 rates for the individual marketplace,” Kurt Kossen, president, retail markets, for Health Care Service Corp. (HCSC), told Bloomberg Law in an email March 23. HCSC operates the Blue Cross Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma, and Texas.

Rates have not been finalized for 2019, Kossen said. “When we establish our rates, we need to make a number of assumptions, including the number of people who will purchase, what and how many services will be used, and what events may occur that could impact what happens in the market. Blue Cross Blue Shield of Oklahoma is proud that we continue to ensure every Oklahoman has a health insurance option each year, and we will continue to work with regulators at the state and federal level to implement policies to help stabilize the market.”

The Department of Health and Human Services didn’t respond to Bloomberg Law’s request for a comment.

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

The Georgetown University Center on Health Insurance Reforms report is at 2017 CBO report on the effect of ending cost-sharing reduction payments is at

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