Analysts: Health insurance rates could soar next year

WASHINGTON – Millions of Americans who buy their health insurance under the Affordable Care Act could have fewer options and face skyrocketing rates this fall because of the federal government’s decision to freeze billions of payments to insurers that cover a higher number of sicker patients, analysts are warning.

The Trump administration announced Saturday that it is putting on hold the “risk adjustment” program in which money is collected from insurers with fewer high-cost plan members and then transferred to insurers with more high-need patients who require more expensive care.

The Centers for Medicare and Medicaid Services blamed the decision on a federal court decision in New Mexico, which ruled the agency was using a flawed formula to determine its collections and payment amounts.

Insurers, state regulators, lawmakers and public policy groups predicted that the decision would inject uncertainty into insurance markets just as health insurers are preparing their premiums for next year and states are reviewing their proposed rates.

Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small business owners, and could result in far fewer health plan choices,” said Scott Serota, president and chief executive officer of The Blue Cross Blue Shield Association.

The decision “will undermine Americans’ access to affordable coverage, particularly for those who need medical care the most,” Serota said.

America’s Health Insurance Plans, the trade association for health insurers, warned that the decision “will create more market uncertainty and increase premiums for many health plans, putting a heavier burden on small business and consumers, and reducing coverage options.”

Costs for taxpayers also will rise as the federal government spends more on premium subsidies, the group said.

In Tennessee, health insurers had to submit their 2019 rates to the state for review by Wednesday. State regulators will be in regular contact with carriers to determine the potential impact a lengthy suspension of the payments could have on solvency and premiums, said Tennessee Insurance Commissioner Julie Mix McPeak, who also serves as president of the National Association of Insurance Commissioners.

“While there are still numerous unknowns, we are hopeful greater certainty can be found, and this issue can be resolved quickly – ideally before the August timeline for the 2017 payments – so there will be no need to adjust rates for 2019,” McPeak said. “However, only time will tell.”

McPeak said she looked at extending the rate-filing deadline after the Trump administration’s decision on the riskadjustment payments but ultimately decided that wasn’t possible because of the approval process and timelines imposed by CMS.

“I do think insurers are going to be looking seriously at factors of uncertainty in the actuarial formula because this does add some uncertainty back into the process when we were hopeful that things were going to be settled for the next plan year,” she said.

The decision to freeze the payments could mean that some insurers will lose millions of dollars. CMS said it would halt payments for the 2017 benefit year, which had been expected to total $10.4 billion.

Blue Cross Blue Shield of Tennessee received nearly $47 million of the payments for 2016, the most recent in which the payments have been made. Humana received more than $2 million in Tennessee for the same year, while United Healthcare got about $14,500.

The Trump administration has asked the New Mexico judge to reconsider his decision declaring the distribution formula flawed.

Sen. Lamar Alexander, a Tennessee Republican who chairs an influential committee that oversees health-care policy, also urged the judge to speed up the review of the decision to avoid unnecessary increases in premiums.

“This is a case of a federal judge disagreeing with the Trump administration as it is trying to defend an Obama administration rule on risk adjustment payments,” Alexander said.

Summit Medical Group, a physicians’ group serving 14 East Tennessee counties, also expressed concerns about the impact of the decision on its patients.

“We are concerned that any increase in health care premiums will prevent people from seeking the care they need and thus negatively impact the health of our patients,” said Ranee Guard, Summit’s chief operating officer.

“Affordable insurance for preventative health care needs, in addition to treating high-risk patients, is a critical component of what we do at Summit Medical Group,” Guard said.

The Affordable Care Act has never been allowed to work the way it was designed, and the Trump administration’s decision to freeze the payments is part of its ongoing strategy to undermine the law, said Chris Coleman, an attorney for the Tennessee Justice Center, a nonprofit public policy group.

“It’s this continual chipping away and destabilizing of the marketplace by completely unnecessary actions that are a death by a thousand cuts,” Coleman said. “If they would just finally settle on a policy rather than trying to sabotage the program, I think we could get some stability.”

The decision will not only result in premium increases, Coleman said, it probably will prompt some insurers to design their policies in a way that discourages patients with high-cost illnesses from enrolling in their plans.

Reporter Kristi L. Nelson in Knoxville contributed to this story.