On one level, the White House’s pledge late Thursday to stop cost-sharing payments to health insurers under the Affordable Care Act won’t make a major difference in Georgia.
That’s because three of the four health insurers offering coverage on the state exchange have already factored in the likely elimination of the payments in their huge 2018 premium increases.
The ACA created the exchanges to help people without job-based or government insurance to buy affordable coverage. The cost-sharing subsidies that will be eliminated have been going to insurers, which use them to lower the out-of-pocket costs, such as deductibles and copays, for lower-income exchange customers.
The three insurers already had raised exchange premiums in Georgia by more than 50 percent — above their initial rate requests — due to an assumption that the federal payments would stop coming in.
Media reports say Georgia’s premium hikes in the exchange are the largest in the country.
The fourth exchange insurer, Kaiser Permanente, told GHN on Friday that it was evaluating the situation in the wake of the administration’s decision.
But on the heels of his executive order to ease rules on association health plans and short-term policies, Trump has shown that he’s willing to make a variety of moves to unravel the ACA as much as he can, after Republicans in Congress failed to repeal it, as they had long pledged.
Trump went on Twitter to urge Democrats to make a deal: “The Democrats ObamaCare is imploding,” he wrote. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”
Some Democrats have expressed a willingness to make changes to the ACA, often called Obamacare, but they have balked at broad revisions backed by Republicans, or anything equivalent to repeal.
Rough times on the exchanges
Across Georgia and the nation, individuals and families needing exchange coverage were already lined up for spikes in their premiums.
Experts pointed out, though, that as premiums soar in the exchanges, 85 percent of Georgians getting that coverage will also see their subsidies rise to cushion that blow.
“The net premium stays the same’’ for those getting subsidies (with incomes from 100 percent to 400 percent of the federal poverty level), said Russ Childers, a health insurance agent based in Americus.
But Childers said Friday that if the Trump administration had promised to pay the insurers the cost-sharing money, rather than forcing them to shoulder the cost of subsidies, consumers could have seen either lower premiums or possible rebates.
Childers said the individual insurance market was already broken before the ACA was passed in 2010. “In general, we just traded old problems for new problems,” he said.
With the new decision on payments, the insurance companies may still be able to drop out of the exchange for 2018, Childers said.
“I think the message is, everybody is really frustrated with the way things are.”
In a fundamental way, the government decision to end the cost-sharing reductions to insurers won’t save money, experts said.
The higher premiums will replace the payments to insurers, noted Bill Custer, a health insurance expert with Georgia State University. Taxpayers will pay by funding higher individual subsidies that accompany the rate hikes, he said.
The other 15 percent on the exchanges, who do not get individual subsidies, are the ones facing real sticker shock on premiums. “They’re going to buy less coverage,’’ Custer said. “When the price goes up, people will buy less coverage.”
Insurers still must keep the lower deductibles and copays for many of the exchange customers, as required by the ACA.
The annual cost to the government of the insurer payments is currently about $7 billion.
With the administration moves, Custer said, the individual market will be less attractive to insurers.’’ The net effect in the long term will be less choice and less coverage, he added.
“The vision of the ACA is to make a competitive insurance market. The Trump administration has moved in the opposite direction.”
Kaiser was the only exchange insurer in Georgia to have a rate hike approved that was less than 50 percent. The nonprofit’s increase was set at 30 percent.
The state department of insurance said Kaiser would need to work with federal health officials to examine its options. “We have completed our review,’’ said Glenn Allen, a spokesman for the agency.
Open enrollment for the ACA begins Nov. 1. Almost 500,000 Georgians signed up for coverage for this year.
“Already this year, insurers in Georgia requested premium increases of over 50% based largely on the looming threat that the cost-sharing reduction payments would be terminated,’’ said Beth Stephens of Georgia Watch, an advocacy group. The ending of insurer payments, she said, “could result in an exodus of insurers from the market and jeopardize the availability of affordable health insurance for many Georgians.”
More changes ahead?
Congress can appropriate the funds needed to keep the payments in place, Stephens said. “We will continue to urge bipartisan solutions that will stabilize the marketplaces.’’
State Rep. Sharon Cooper (R-Marietta), chair of the House Health and Human Services Committee, told GHN at a conference Friday that “Obamacare is failing,’’ noting the high deductibles that many consumers have in exchange coverage.
Cooper said moving health care decision-making to the states may help improve the insurance situation. “I believe that states can come up with a solution that is tailored for their citizens,” she said.
Several states are in the process of requesting “waivers’’ from the federal government to alter the federal insurance requirements under the ACA.
“We are at a crisis situation,’’ said Kelly McCutchen of the Georgia Public Policy Foundation, a proponent of a waiver approach, at a conference his group sponsored Friday. As a state, he said, “we’ve got to do something.”
The president’s action is likely to trigger a lawsuit from state attorneys general, who contend the subsidies to insurers are fully authorized by federal law, and say the president’s position is reckless, the Associated Press reported.
“We are prepared to sue,” said California Attorney General Xavier Becerra. “We’ve taken the Trump administration to court before and won.”
Some leading GOP lawmakers have called for continuation of the payments to insurers, at least temporarily, so constituents can maintain access to health insurance. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-Tenn.) is working on such legislation with Democratic Sen. Patty Murray of Washington state, the AP noted.
The administration’s moves came just hours after it ordered a loosening of the rules on association health plans and short-term health policies.
Trump said these would give consumers more insurance options.
Critics have warned, though, that such actions could attract the healthiest customers to the newly structured plans through lower premiums and stripped-down coverage, and thus destabilize the more regulated health plans.
These new health plans could avoid some currently enforced requirements of the ACA, critics say.
The Trump administration also has reduced support for the ACA in other ways, including by shortening the enrollment period for the exchanges, and by cutting funding for efforts to reach potential exchange customers and sign them up.
And the administration has hinted that it may stop enforcing the tax penalty for those who do not obtain health coverage. This could effectively nullify the insurance mandate that is a pillar of the entire health law.