State: Cov­ered Cal­i­for­nia pre­mi­ums could soar.

Trump re­mains coy on sub­si­dies

The Mercury News - - Front Page - By Chad Ter­hune This story was pro­duced by Kaiser Health News, an ed­i­to­ri­ally in­de­pen­dent pro­gram of the Kaiser Fam­ily Foun­da­tion.

Cal­i­for­nia’s health ex­change said Wed­nes­day it has or­dered in­sur­ers to add a sur­charge to cer­tain poli­cies next year be­cause the Trump ad­min­is­tra­tion has yet to com­mit to pay­ing a key set of con­sumer sub­si­dies un­der the Af­ford­able Care Act.

The de­ci­sion to im­pose a 12.4 per­cent sur­charge on sil­ver-level health plans in 2018 means the to­tal pre­mium in­crease for them will av­er­age nearly 25 per­cent, ac­cord­ing to Cov­ered Cal­i­for­nia. Tax­pay­ers, not con­sumers, will bear the brunt of the ex­tra rate hike be­cause fed­eral pre­mium as­sis­tance for pol­i­cy­hold­ers, which is pegged to the cost of cov­er­age, will also in­crease.

Statewide, rate in­creases will vary by in­surer and re­gion. What con­sumers pay de­pends on where they live, their in­come, what level of cov­er­age they want and which in­surer they choose.

Cal­i­for­ni­ans can get their first look at next year’s health plan prices and op­tions on the state’s rate cal­cu­la­tor, re­leased Wed­nes­day.

The state’s open en­roll­ment pe­riod, which is longer than that for the fed­eral ex­change, runs from Nov. 1 to Jan. 31. About 1.4 mil­lion Cal­i­for­ni­ans buy their own cov­er­age through the state mar­ket­place and nearly 90 per­cent re­ceive fi­nan­cial as­sis­tance that re­duces what they pay.

In Au­gust, Cov­ered Cal­i­for­nia an­nounced that 2018 pre­mi­ums would rise by 12.5 per­cent, on av­er­age, statewide. That ticked down slightly to 12.3 per­cent dur­ing reg­u­la­tory re­view. But the ex­change also warned that the ad­di­tional in­crease, av­er­ag­ing 12.4 per­cent, would be added to the sil­ver-tier plans if Pres­i­dent Don­ald Trump failed to com­mit to con­tin­ued fund­ing for the so-called cost-shar­ing sub­si­dies that help re­duce some con­sumers’ out-of-pocket ex­penses. Those pay­outs to­tal about $7 bil­lion this year na­tion­wide.

Trump has con­tin­ued pay­ing them on a mon­thto-month ba­sis while re­peat­edly threat­en­ing to cut them off and re­peal the en­tire health law. He has re­ferred to the pay­ments as “bailouts” for in­sur­ance com­pa­nies.

Peter Lee, ex­ec­u­tive di­rec­tor of Cov­ered Cal­i­for­nia, said the sur­charge is far from ideal but that the un­cer­tainty in the na­tion’s cap­i­tal left the state with no other op­tion.

“Cov­ered Cal­i­for­nia worked hard to come up with a plan that en­sures a sta­ble mar­ket and pro­tects as many con­sumers as pos­si­ble from an un­nec­es­sary price hike,” Lee said in a state­ment Wed­nes­day.

The ex­change took sev­eral mea­sures in an at­tempt to shield con­sumers from the ef­fects of the sur­charge. One of them was to cre­ate a new sil­ver plan to be sold out­side the ex­change to in­di­vid­u­als and fam­i­lies who make too much money to qual­ify for fed­eral sub­si­dies. The sur­charge will not be ap­plied to those plans, spar­ing un­sub­si­dized con­sumers that ex­tra cost.

The sur­charge will ap­ply only to the sil­ver-level plans, the sec­ond-least ex­pen­sive op­tion among the ex­change’s four tiers of cov­er­age. That’s be­cause only peo­ple en­rolled in sil­ver plans ben­e­fit from the cost-shar­ing sub­si­dies that Trump has threat­ened to ter­mi­nate.

Cov­ered Cal­i­for­nia said that 78 per­cent of sub­si­dized con­sumers will see no change in what they pay or may pay even less de­spite the sur­charge be­ing im­posed. The re­main­ing 22 per­cent of con­sumers will see higher net pre­mi­ums. About half of those con­sumers will get in­creases of less than $25 per month, ac­cord­ing to the ex­change.

In one sce­nario, the ex­change said a 25-year-old in Los An­ge­les with a $20,000 an­nual in­come would see his sil­ver plan rate rise next year from $227 per month to $270. That in­cludes a reg­u­lar rate in­crease of $13 plus a sil­ver sur­charge of $30.

But that per­son would only pay $13 more per month out of his own pocket, be­cause the fed­eral pre­mium sub­sidy would in­crease from $160 to $190, fully off­set­ting the sur­charge. Statewide, the sur­charges on sil­ver plans vary among health in­sur­ers from 8 to 27 per­cent.

John Baackes, chief ex­ec­u­tive of L.A. Care Health Plan, said his 2018 rates will be 11 per­cent­age points higher be­cause of the added sur­charge — a 23 per­cent av­er­age in­crease in­stead of 12 per­cent. His health plan has about 26,000 ex­change en­rollees. He said the higher pre­mi­ums would be “to­tally avoid­able” if the Trump ad­min­is­tra­tion im­ple­mented the ACA.

In ad­di­tion to higher rates, Cov­ered Cal­i­for­nia faces the loss of a ma­jor in­surer across much of the state. In Au­gust, An­them Blue Cross said it was pulling out from about half of Cal­i­for­nia’s coun­ties, forc­ing 153,000 cus­tomers to find new cov­er­age.

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