Health plans would likely feel the financial hit if the courts ultimately strike down Obamacare’s cost-sharing subsidies. That’s because those payments go directly to insurers to make up for lower payments from their poorest customers.
A federal court ruled today that the Obama administration has been improperly funding the cost-sharing subsidies. The ruling is stayed pending appeal, so there will be no immediate fallout for health plans.
But at stake is approximately $175 billion over a decade that insurers would receive to subsidize their Obamacare customers. Cost-sharing subsidies are available to enrollees with incomes below 250 percent of the federal poverty level who enroll in silver plans. They’re designed to reduce out-of-pocket costs when those individuals access medical care.
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As the fourth year of Obamacare approaches, Politico’s Paul Demko reports that consumers can expect more of the same price hikes and narrowed choices as they have seen the first three years. The Obama administration insists that prices only rose eight percent for 2016 over the previous year – even though that itself is still more than three times the rate of inflation, and ignores states like Minnesota where the average premium increase was over 30 percent.
“There are reasons to think the next round may be different,” Demko warns. He quotes a Deloitte executive who agrees. “A number of carriers need double-digit increases” for 2017. Those price increases will hit the Obamacare exchanges on November 1st, one week before voters elect a new President and Congress.
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A federal judge on Thursday ruled the Obama administration has been improperly funding an Obamacare subsidy program, a huge win for the House of Representatives’ lawsuit against the White House.
The judge said that the program can continue, pending appeal. The ruling, if it stands, could be a significant financial setback for the millions of low-income Americans who benefit from the cost-sharing subsidies, which help people pay for out-of-pocket costs like co-pays at the doctor’s office.
Congress authorized the program but never actually provided the money for it, wrote U.S. District Court Judge Rosemary M. Collyer, a George W. Bush appointee.
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Rising healthcare costs are Americans’ primary financial concern. In fact, a recent survey found that 76% of Americans are concerned about increasing health insurance costs with nearly two-thirds more concerned this year than they were last year. As is now clear, the Affordable Care Act is making the problem worse. A recent S&P Global Institute report (not publicly available) showed that healthcare spending per individual market enrollee increased by nearly 70% in the first two years after the key provisions of the ACA took effect.
A recent Mercatus working paper, authored by Brian Blase, along with Doug Badger of the Galen Institute and Ed Haislmaier of the Heritage Foundation, found that insurers made risk corridor claims of $273 per enrollee on individual market qualified health plans—plans that comply with the ACA and are certified to be sold on exchanges—in 2014. Risk corridors were designed to transfer money from insurers that made profits selling QHPs to insurers that incurred losses on QHPs. Assuming that a fully-funded risk corridor program would have subsidized about two-thirds of insurer losses, insurers likely lost around $400 per enrollee in 2014. Since insurers enrolled about 8 million people in 2014, they likely lost about $3.2 billion overall selling individual QHPs.
The House Energy and Commerce Committee Republicans can’t find most of the $200 million that the Obama administration claims it recouped from state-based health care exchanges as part of a federal grant program to help them set up shop, according to a new report obtained by Morning Consult.
Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt told the committee in December that “over $200 million” had been returned to federal coffers from the state exchanges since the grant program went into effect.
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The Obama administration on Friday announced changes to ObamaCare sign-up rules that are intended to cut down on people gaming the system and address a complaint from insurance companies that they say is causing them to lose money.
The Centers for Medicare and Medicaid Services announced that it is tightening the rules for enrolling in one of ObamaCare’s extra sign-up periods.
The CMS unveiled an interim final rule late Friday that could help the Affordable Care Act’s struggling co-op plans. The rule also responds to insurers’ complaints that people are abusing special enrollments in the exchanges.
The CMS tightened the use of special enrollments, specifically making the rules around moving to a new home more restrictive to avoid any gaming of the system. Co-ops also can seek outside funding from investors to build up their capital, something that was outlawed previously.
Using a combination of subsidized premiums for Marketplace coverage, an individual mandate, and expanded Medicaid eligibility, ObamaCare has increased insurance coverage rates. The authors of this study assess the relative contributions to insurance changes of these different provisions in the law’s first full year.
Their four key findings include:
- Insurance coverage was only moderately responsive to price subsidies, but the subsidies were still large enough to raise coverage by almost one percent of the population; the coverage gains were larger in states that operated their own health insurance exchanges (as opposed to using the federal exchange).
- The exemptions and tax penalty structure of the individual mandate had little impact on coverage decisions.
- The law increased Medicaid coverage both among newly eligible populations and those who were previously eligible for Medicaid (the “woodwork” effect), with the latter driven predominantly by states that expanded their programs prior to 2014.
- There was no “crowdout” effect of expanded Medicaid on private insurance. Overall, we conclude that exchange premium subsidies produced roughly 40% of the ACA’s 2014 coverage gains, and Medicaid the other 60%, of which 2/3 occurred among previously-eligible individuals.
Insurers — who might not be allowed the huge rate increases they need to stay solvent — are looking to save money by eliminating so-called Bronze-level plans.
One problem, according to the article, is risk adjustment–as CMS data indicate bronze is the only metal level for which insurers of all sizes in the individual and group markets had to pay into the program. Federal officials are considering some changes to the risk adjustment program, which some say unfairly penalizes smaller insurers.Already, filings show a CareFirst BlueCross BlueShield subsidiary in Virginia will transform its bronze plans into silver-level plans for 2017, according to Inside Health Policy, and experts tell the publication this could set a troubling precedent for the industry.
Nearly 25% of Americans surveyed last September who had coverage through employer plans, the Affordable Care Act exchanges, or individual plans outside the exchanges reported problems paying family medical bills in the previous 12 months, according to the Urban Institute’s Health Reform Monitoring Survey, released last month. That compared with 16% of people on Medicaid and 27.8% of uninsured individuals who said they had problems with medical bills.
The Kaiser Family Foundation reached similar findings through focus group interviews with 91 low-income Medicaid and exchange-plan enrollees in six cities during January and February 2016.
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