Insurers, states forced to play guessing game with 2018 rates

It’s crunch time for insurance companies and state regulators as they set rates for 2018. Right now, though, they are flying blind. That’s because the federal government has yet to commit to making payments that help insurers offset the cost of providing low-income people with more affordable plan options on Affordable Care Act exchanges.

“I can’t underscore that time is of the essence, and some of our critical decisions may have to occur in a relatively short period of time,” Anthem CEO Joseph Swedish said on an investors call last week.

Anthem sold plans on the marketplace in 14 states this year, but Swedish questioned if that would be sustainable next year without the so-called cost-sharing reduction payments. The insurer has already told regulators it plans to leave or scale back its presence on the marketplaces in Indiana, Ohio and Wisconsin. Depending on what happens with CSRs, more exits could follow.

Swedish isn’t alone in hoping for clear direction from the Trump administration. Across the nation, insurers and state regulators are playing a bit of a guessing game, especially since the administration has thus far been making the CSR payments on a month-bymonth basis.

Modern Healthcare contacted regulators in all 50 states and the District of Columbia to see how they are handling the uncertainty. In the absence of any assurances by the federal government, state commissioners are making one of three choices:

• Have plans draft two rates with one that assumes CSRs and one that does not

• Issue no guidance at all or have plans file assuming CSRs will continue

• Have them file rates assuming CSRs will not continue

Based on responses to Modern Healthcare’s inquiry, 38 states and Washington, D.C., have either told plans to assume CSRs or gave no guidance at all, letting plans choose how to proceed. Seven states have had insurance companies draft two rates and six have companies that are filing assuming no CSRs.

“We’re trying to give carriers some sort of certainty,” said Idaho Department of Insurance Product Bureau Chief Wes Trexler, which asked carriers to assume CSRs will not continue.

“For those states that have decided to assume CSRs there is a downside to that approach,” said Ceci Connolly, CEO of the Alliance of Community Health Plans. She said plans could face significant financial losses if the CSRs go away.

If a plan files assuming no CSRs and that ends up being the case, premiums could rise at least 20% from last year, according to the Kaiser Family Foundation.

Such a scenario would result in more consumers either choosing to have no coverage at all or choosing a bronze plan, according to Sean Mullin, a senior director at

“Filing two sets of rates in one state is not at all typical,” Owen said. “It is not as simple as including or excluding an amount for CSR in the rates.” Rebecca Owen Health research actuary The Society of Actuaries

the healthcare consulting firm Leavitt Partners.

Having more people going into high-deductible bronze plans would be the worst-case scenario for medical providers. “There will be more people getting procedures without providers getting paid leading to an increase in bad debt,” Mullin said.

If insurance companies assumed no CSRs and they are paid, they would have to issue rebates to consumers since they would have taken in too much money under the medical loss ratio guidelines outlined in the ACA. This policy dictates the amount of margin that can be retained after medical costs are paid.

For the states that have had plans develop two rates, actuaries are faced with the unprecedented challenge of making sure rates are neither too high or too low, according to Rebecca Owen, health research actuary for the Society of Actuaries.

“Filing two sets of rates in one state is not at all typical,” Owen said. “It is not as simple as including or excluding an amount for CSR in the rates.”

Factors that come into play when developing two rates is predicting how consumers will respond to both prices and how other plans in the market will respond to the continuation or end of CSRs. Not all plans receive the same amount of money, so they may choose a limited premium increase if the funds vanish.

For the 38 states now relying on HealthCare.gov for their residents to buy insurance, there appears to be limited opportunity for plans to update their rates once they are submitted to the CMS, which is only allowing them to submit one rate by the Aug. 16 deadline. Plans on the federal exchange will have until Sept. 27 to sign a contract with the CMS. A truncated open-enrollment season runs from Nov. 1 to Dec. 15.

Currently, the federal government is spending $7 billion a year to lower deductibles and co-pays for about 8.4 million customers with silver plans, which are the only plans eligible for the funds. The Kaiser Family Foundation estimated that would grow to $10 billion in 2018.

“There is not a lot of runway from an operations standpoint to be sure rates are actually rolled out in time,” said Hans Leida, an actuary at consultancy Milliman.