Health care subsidy cuts also threaten tax credits
Health experts: Bigger impact down the road
The Trump administration is ending subsidies that help low-income consumers afford health care insurance, sharply driving up rates for 2018, but the bigger impact is just down the road, experts say.
The U.S. Health and Human Services and Centers for Medicare and Medicaid Services said Thursday that costsharing reduction payments, which are made to insurers, will end immediately. More than half of Pennsylvania’s Affordable Care Act members received the subsidies, which totaled $214 million in 2016 or an average of $949 per enrollee, according to Antoinette Kraus, director of Pennsylvania Health Access Network, a Philadelphia-based advocacy group.
People with earnings less than
$30,000 a year for a single person and $50,400 for a family of three are eligible for the cost-sharing subsidies.
In June, the state Insurance Department said the end of the subsidies would increase rates by 20.3 percent statewide.
Otherwise, the rate hikes would be in the low single digits, state regulators have said. The department plans to announce on Monday the 2018 approved rates.
But here’s the hitch. People with Obamacare coverage also receive tax credits to make health insurance affordable, which will rise sharply with premiums with the withdrawal of the cost-sharing subsidies. The result: ballooning government deficits for the Affordable Care Act, estimated at $194 billion for 2017 through 2026, according to the Congressional Budget Office.
Obamacare has “certainly been hobbled, to say the least, but it’s not dead yet,” said Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University. “The taxpayer is ultimately going to pay the price for this action: as premiums go up, the tax credits go up and it ends up being a money loser for the federal government.”
Caleb Wallace, senior director of health policy at UPMC Health Plan, said Pennsylvania is “well positioned” for the end of the cost-sharing reductions and the insurance market is “relatively stable and competitive.”
“We’ve been working through this scenario for some time,” he said. “The timing is unfortunate, but we’re committed to this market.”
UPMC Health Plan is the only insurer in Western Pennsylvania still paying commissions to brokers for Obamacare enrollments. Highmark stopped paying commissions as the carrier’s losses mounted in the ACA marketplace.
Ms. Kraus called President Donald Trump’s decision “reckless and shortsighted” in widespread criticism of the decision. U.S. Sen. Bob Casey, D-Pa., condemned the end of the subsidy, saying “Congress must act to reverse this sabotage,” and a joint statement by the American Health Insurance Plans trade group and BlueCross Blue Shield Association said the decision would “make it harder to patients to access the care they need” while increasing costs and restricting choices.
“The president loves to spread chaos among the middle and lower class — because that’s who this affects, mostly,” Sen. Wayne Fontana, D-Brookline said.
Pennsylvania Attorney General Josh Shapiro joined attorneys general from 18 other states on Friday in a lawsuit seeking to continue the cost-sharing reduction payments. The Trump administration indicated it was withholding subsidy payments that are due Oct. 18 to insurers for 9 millionpeople nationwide.
“Obamacare is a broken mess,” Mr. Trump tweeted early Friday.
“You scratch your head and ask, what’s the point of this exercise,” said Susan Dentzer, president and CEO of the Network for Excellence in Health Innovation, a Washington, D.C.-based nonprofit. “He’s doing this to destabilize the market in every way he can. It’s really crazy.”
UPMC has 140,000 ACA members in the 29 counties of Western Pennsylvania, about 80 percent of the market, which compares with 18,000 members with Highmark plans.
Adam Pittler, director of consumer products at UPMC Health Plan, said Obamacare policies have fueled the insurer’s continued growth at a time when Highmark and other carriers have throttled back their presence.
Mr. Wallace sought to reassure jittery consumers that UPMC Health Plan had affordable options for coverage. His advice for ACA enrollment, which opens Nov. 1: “Call a carrier or agent; update your information and go shop.”