Medica seeks rate increase of 56.7 percent

Iowa's remaining seller of statewide plans says action was necessary

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Medica — the only insurer selling statewide plans on the state’s individual market — filed rates Wednesday with the Iowa Insurance Division, asking for an increase of 56.7 percent.

The Minnesota-based insurance company said the move was necessary “due to lack of certainty over the funding of cost-sharing reductions.” The insurer originally asked for a rate increase of 43.5 percent.

Final rates are subject to approval from the insurance division and open enrollment begins Nov. 1.

“We remain hopeful the federal government will fund the cost-sharing reductions, but we are working with the Iowa Insurance Division to help consumers understand the implications of lack of this funding,” said Geoff Bartsh, Medica vice president of individual and family business, in a statement. “We regret the disruption this creates for consumers.”

Cost-sharing reductions are federal payments made to insurers set up through the Affordable Care Act. The payments help cover costs for low-income individuals enrolled in an ACA silver plan.

In Iowa, about 24,000 people qualify for cost-sharing reductions, which translates to about $65 million worth of payments to insurers, Medica has said.

The majority of Iowans buying plans on the exchange — about 44,000 of 72,000 — are eligible for federal subsidies. Medica said subsidies are expected to increase dramatically for 2018 with the refiled rate request.

The future of cost-sharing reductions have been in question for quite some time. The U.S. House of Representatives sued the U.S. Department of Health and Human Services Secretary under President Barack Obama.

That suit challenged the legality of making the cost-sharing reduction payments without an explicit appropriation, according to the Kaiser Family Foundation, and a District Court judge ruled in favor of the House. The ruling was appealed and payments were permitted to continue pending the appeal.

But recent comments by President Donald Trump have again thrust the future of the payments into the spotlight.

On Tuesday, the Congressional Budget Office put out a report describing the effects of eliminating the cost-sharing reductions, concluding that “insurers in some states would withdraw from” markets while premiums could increase 20 percent next year and 25 percent by 2020.

Iowa Insurance Commissioner Doug Ommen still is waiting for federal approval of his stopgap proposal, which he believes would lower costs for Iowans.

l Comments: (319) 398-8331; chlesea.keenan@thegazette.com

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