Senate Health-Care Stabilization Funds Could Offset Premium Hikes

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By Sara Hansard

Funds included in the Senate’s health-care bill to stabilize the individual health insurance market could at least partly offset premium increases from eliminating the Obamacare individual mandate, a group of health insurance actuaries said.

The Better Care Reconciliation Act ( H.R. 1628) allocates $15 billion in both 2018 and 2019, and $10 billion in both 2020 and 2021, for short-term stabilization funding to cover high-cost claims in a reinsurance program, the American Academy of Actuaries said in a June 30 letter released July 5. The Affordable Care Act included a reinsurance program from 2014 through 2016, which lowered premiums between 10 percent and 14 percent in 2014, the AAA said.

The individual market in the ACA exchanges as well as outside of the exchanges is facing large premium increases and fewer insurers offering products due to insurer losses as well as insurer uncertainty about what changes will be made to the 2010 law, insurers say. The health insurance industry is calling for greater subsidies for low-income people to help them pay their out-of-pocket expenses. It also wants a continuation of the ACA’s reinsurance program as a way of stabilizing the market in the short term.

Forty counties are projected to have no insurers operating in the ACA exchanges in 2018, according to information released July 5 by the Centers for Medicare & Medicaid Services. The issuer county map compiled by the CMS is based on issuer public announcements through July 3 and could fluctuate. Issuers have until Sept. 27 to decide whether to participate in the exchanges. At least 27,000 active exchange participants live in the counties projected to be without coverage, and as many as 2.4 million participants may have only one choice of plans, the CMS said.

$4B in 2016 Reinsurance Payments

For 2016 an estimated $4 billion in reinsurance payments will be made to 496 issuers nationwide, the CMS said in a June 30 summary report on the transitional reinsurance payments and permanent risk adjustment transfers.

Among the insurers set to receive large reinsurance payments for 2016 are Blue Cross of California with $210.3 million; Blue Shield of California with $200.6 million; Blue Cross Blue Shield of Texas with $135.7 million; Blue Cross Blue Shield of Florida Inc. with $126.8 million; Blue Cross Blue Shield of Illinois with $108.2 million; Kaiser Foundation Health Plan Inc. with $99.5 million; and Blue Cross Blue Shield of North Carolina with $94.1 million, according to the CMS report.

The House’s American Health Care Act includes $138 billion for stabilization funding from fiscal 2018 through fiscal 2026, most of which would likely be used for reinsurance.

Individual Mandate Repeal Would Hurt Stability

The Senate’s stability funding and a provision to fund cost-sharing reduction subsidies for low-income people in 2018 and 2019 would help reduce premiums, Cori Uccello, senior health fellow with the American Academy of Actuaries, told Bloomberg BNA July 5.

“But on the other side they would take away the individual mandate, which would put more upward pressure on premiums,” Uccello said. Both the Senate and House bills would require people to have continuous coverage or either wait six months before buying coverage again (under the Senate bill), or pay a 30 percent surcharge for a year (under the House bill). That “probably doesn’t do as much to encourage people to buy coverage sooner when they’re healthy, but it does provide some protection to insurers from people who wait to get coverage,” she said.

“To the degree that you pour taxpayer money into the insurance companies and they don’t have to get it from their customers, premiums can be lower” due to reinsurance payments, Douglas Holtz-Eakin, president of the conservative American Action Forum, told Bloomberg BNA July 5.

“Everybody wants more money,” Holtz-Eakin said. “How you get it matters.” Actuaries are looking for “the right combination” of reinsurance funding and risk adjustment payments, he said. The ACA’s permanent risk adjustment program transfers money between insurance plans based on who covers the sickest enrollees.

To contact the reporter on this story: Sara Hansard at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

Information on the Better Care Reconciliation Act is at https://www.budget.senate.gov/bettercare.The American Academy of Actuaries' letter on the Better Care Reconciliation Act is at http://actuary.org/files/publications/BCRA_Comment_Letter_063017.pdf.Avalere Health's report, Premium Increases and Fewer Insurers Participating Expected in Exchange Market in 2018, is at http://src.bna.com/quP.The CMS county-by-county 2018 exchange participation map is at http://src.bna.com/qvm.The Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2016 Benefit Year is at http://src.bna.com/quG.

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