After months of threats that prompted Iowa’s lone statewide Obamacare insurer to raise rates, President Donald Trump announced late Thursday he will immediately end aid to health insurers that helps millions of lower-income Americans afford coverage.
Under the Affordable Care Act, cost-sharing reductions are federal payments made to insurers that help eligible consumers afford their deductibles and other out-of-pocket expenses.
The future of cost-sharing reductions has been a question for some time. The U.S. House sued the U.S. Department of Health and Human Services Secretary under President Barack Obama, challenging the legality of making the payments without an explicit appropriation, according to Kaiser Family Foundation. A judge ruled in favor of the House, but the ruling was appealed and payments were allowed to continue while the case was on appeal.
Iowa’s Republican senators said Friday that Trump’s decision order will force Congress to review these payments.
“Senators (Lamar) Alexander (R-Tennessee) and (Patty) Murray (D-Washington) have been working on bipartisan legislation that would fund the payments legally and make other reforms, but there’s concern that the Senate minority leader will shut down any forward movement on a bipartisan bill like he has to date,” said Sen. Chuck Grassley.
Politico reported Friday that it was Trump himself who would not support a congressional deal allowing the payments to resume — unless he got something in return, like money for his proposed border wall.
The costs of these payments were $7 billion in fiscal year 2017 and could hit $10 billion in 2018 and $16 billion by 2027, according to estimates by the Congressional Budget Office.
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In Iowa, about 20,000 people qualify for cost-sharing reductions, which translates to about $65 million worth of payments to insurers.
“The reality in Iowa is that continuing the status quo simply isn’t an option because Obamacare is unsustainable,” said Sen. Joni Ernst. “I remain focused on finding a path forward to ensure affordable and quality care for Iowans.”
With the start of open enrollment for Obamacare just three weeks away — starting Nov. 1 — here are three things Iowans need to know.
The change won’t further affect 2018 rates (because insurers were anticipating this).
In August, Minnesota-based Medica — the only insurer selling statewide plans on Iowa’s individual market — asked the state for an average 56.7 percent rate increase over 2017 rates.
The reason for the eye popping increase? The uncertainty at the time over the funding of cost-sharing reductions.
Medica initially sought a rate increase of 43.5 percent, but the insurer plotted out this worst-case scenario and went back to ask the Iowa Insurance Division to approve the recalculated, higher rates — which the insurance division did.
“The decision by President Trump to end CSR payments will not change Medica consumer’s current health plans or change the options available to them in 2018,” said Geoff Bartsh, Medica vice president for individual and family business, on Friday. “Our premiums for 2018 anticipated this action and were increased previously to account for it.”
Iowans are still eligible for subsidies
Cost-sharing reductions are different from the subsidies consumers receive to help cover premiums. Cost sharing reductions are federal payments made to insurers. The payments help cover costs for low-income individuals enrolled in an Obamacare plan.
Most Iowa customers qualify for subsidies and those increase as the price of premiums increase
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“The bottom line is that we anticipated this action in our filings and we are prepared,” Bartsh said. “We strongly encourage consumers to shop on the insurance exchange in their state. Federal subsidies are not going away and, as a result of this action, will go up resulting in lower cost options for many consumers.”
Unfortunately, there is a group of individuals who will feel the full brunt of that 56.7 percent increase: The 28,000 Iowans shopping on the exchange who live above the 400 percent poverty level and are not eligible for subsidies. The insurance division has said that a 55-year-old couple making $65,000 a year could pay as much as $33,000 annually for premiums.
This change doesn’t impact the Iowa Insurance Commissioner’s “stopgap” measure — though that still hasn’t been approved.
In August, Insurance Commissioner Doug Ommen submitted the state’s final plea to the federal government, asking for permission to make changes he believes will buoy Iowa’s struggling Affordable Care Act marketplace.
The stopgap seeks to temporarily provide consumers with age- and income-based tax credits as well as use a reinsurance mechanism for insurers for costly medical claims. The state still is waiting to hear whether that waiver request will be approved.
The proposal is not meant to fix all the issues, Ommen has said, but he believes it can stabilize the market by bringing more healthy and young individuals into the marketplace, as well as more insurers.
The Insurance Division and state of Iowa said Friday that because the final waiver submission for the Iowa Stopgap Measure only included Advanced Premium Tax Credit funds and not cost-sharing reduction funds, there is no impact by Trump’s action on the proposed stopgap measure. Gov. Kim Reynold’s office said Friday that she remains in “continual contact” with the White House and Centers for Medicare and Medicaid Services.
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