An unexpected price hike could be coming for some Ohioans who buy health insurance on the Affordable Care Act marketplace, following the federal government’s plan to freeze payments to insurers.
Residents will also have less help searching for the right plan after federal funding for enrollment outreach was slashed to $10 million for the 34 states where people buy insurance through the federal government’s Healthcare.gov. Funding was $36 million last year and $62.5 million under the last year the Obama administration managed the fund.
While the Trump administration hasn’t repealed and replaced the Affordable Care Act, it has still been chipping away at the insurance markets created by the health law.
“I hate to use the word clever but it’s a clever way to unravel the Affordable Care Act,” said Grant Reed, analyst with McGohan Brabender, a local health benefits firm.
The payments that are being suspended by the Trump administration are part of the so called “risk adjustment” program, which takes payments from insurers with healthier customers and redistributes that money to companies with sicker enrollees. No taxpayer subsidies are involved.
Payments are made retroactively and for 2017 are $10.4 billion.
The idea behind the program is to remove the financial incentives for insurers to “cherry pick” healthier customers. The government uses a similar approach with Medicare private insurance plans and the Medicare prescription drug benefit.
Reed said regulations limit insurers ability to charge more to lower their risk, so the loss of these payments could make some of these insurance companies pull back or walk away altogether rather than risk big losses. This especially will be felt by the insurers that sell plans for small groups.
“I think it’s going to make virtually everyone walk away from the exchange in the small group market. You just have too much risk. You can’t do anything to protect yourself,” he said.
As of June, the 2019 rates were estimated to rise an average of 8.2 percent in Ohio. Many people qualify for subsidies that lower the final cost of these plans, but those who make too much to qualify have continued to see premiums soar.
Dayton-based CareSource is waiting for more guidance from the Center for Medicare and Medicaid Services.
Scott Brockman, CareSource VP of actuarial science, said the insurer’s rates for 2019 coverage have already been filed and doesn’t anticipate any changes in the premiums submitted.
“CareSource has been in the Marketplace since the beginning of the Affordable Care Act, and we remain committed to providing affordable, quality health care coverage to our current membership and consumers who still need coverage,” he said in a statement.
The Ohio Department of Insurance, which approves final premium rates for the marketplace plans, is evaluating what potential impacts there might be for plans sold on the exchange in 2019, said spokesman Chris Brock.
Centers for Medicare and Medicaid Administrator Seema Verma said the Trump administration was disappointed by a New Mexico court ruling that questioned the workings of the risk program for insurers.
The administration “has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows (the government) to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets,” she said.
Unable to totally repeal the law, the White House and the Republican-led Congress have taken a series of steps that make it harder for the ACA to work as intended. Among them:
— Repealing, effective next year, an unpopular requirement that most people carry health insurance, or risk fines. The nonpartisan Congressional Budget Office estimates that will raise premiums by about 10 percent.
— Eliminating another set of payments to insurers, which covered discounts that the companies are required to provide low-income people on their copayments and deductibles.
— Clearing the way for low-cost insurance plans that cover less and may siphon healthier customers away from ACA plans.
The Associated Press contributed to this report.