Legal Dispute Could Result in Big 2018 Health Insurance Spikes


Failing to pay subsidies for low-income Obamacare enrollees could result in premium increases of more than 20 percent in some cases in 2018.

Moreover, silver tier exchange plans, which cover an average of 70 percent of medical claims, could end up costing more than gold tier plans, which cover an average of 80 percent of medical claims.

That was the assessment of health actuary Karen Bender, who spoke at a conference I covered sponsored by the Alliance for Health Reform.

In 2016, a federal district court judge ruled in favor of House Republicans, who had sued the Obama administration on the grounds that the Affordable Care Act cost-sharing subsidies had been paid illegally without a congressional appropriation.

The ruling has been suspended pending appeal. So far, the Trump administration is continuing to make the payments to insurers to cover out-of-pocket costs for people with incomes between 100 percent and 250 percent of the federal poverty level—$29,700 for a single person and $60,750 for a family of four. Fifty-nine percent of the enrollees, about 5.7 million enrollees, receive the subsidies.

Resolving the issue of whether the cost-sharing subsidies will continue to be paid is a top concern for health insurers. “We need to know,” Bender said. “We’re pricing right now, as we speak” for the 2018 exchanges, she said.

“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,” Bender said. “The insurance companies do not have the margins to absorb this loss of revenue.”

Moreover, the 20 percent increase for silver tier plans does not include other increases, such as for medical inflation, Bender said. Medical inflation typically goes up more than general inflation.

In 2017, premiums shot up an average of about 25 percent in the most popular silver tier plans on the exchanges as insurers played catch up to cover sicker-than-expected exchange enrollees.

Read my full article here.

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