OHIC works to limit health insurance subsidy cut’s effect on insured

MARIE L. GANIM, the Rhode Island Health Insurance Commissioner said that in order to mitigate impacts on health insurance rates, the state will focus insurance rate increases on the previously subsidized, passing the cost to the federal government. / PBN FILE PHOTO/ RUPERT WHITELEY
MARIE L. GANIM, the Rhode Island Health Insurance Commissioner said that in order to mitigate impacts on health insurance rates, the state will focus insurance rate increases on the previously subsidized, which in effect passes the cost to the federal government. / PBN FILE PHOTO/ RUPERT WHITELEY

PROVIDENCE — When President Donald Trump signed an executive order canceling Cost Sharing Reduction subsidies to 17,000 Rhode Islanders who depend on the program to afford health care insurance, the R.I. Office of the Health Insurance Commissioner asked insurers to add the lost funding to their 2018 Silver plan cost estimates, knowing that the Affordable Care Act requires the federal government to maintain affordability and thus would be required to absorb the increases.

The cost-sharing reduction payments helped individuals with incomes between $11,880 and $29,700 enroll in plans with lower deductibles, copayments or coinsurance, reducing their out-of-pocket costs, according to Attorney General Peter F. Kilmartin’s office, which has joined a lawsuit by 16 states and the District of Columbia challenging the executive order.

Both Blue Cross & Blue Shield of Rhode Island and Neighborhood Health Plan of Rhode Island have stated 2017 plans and rates for insurance offered on Health Source RI will not be affected by the canceled CSR payments.

“Neighborhood Health Plan of Rhode Island’s commercial members can rest assured that there will be no changes to our 2017 plans or rates as a result of the Trump administration’s decision to end CSRs,” said Neighborhood CEO Peter Marino. “Neighborhood continues to work with our partners at the state’s Office of the Health Insurance Commissioner to mitigate the impact on 2018 rates.  We are also working closely with our supportive congressional delegation, all of whom share Neighborhood’s commitment to connecting all Rhode Islanders with access to high-quality health care that they can afford.”

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“Considering the proximity of the CSR decision to the annual open enrollment period, it is vital that Congress act quickly in completing the bi-partisan effort to stabilize the marketplaces through formal authorization of CSR funding,” added Marino.

Since Trump had been threatening to cancel the payments for some time, “we knew that we needed a contingency plan,” said R.I. Health Insurance Commissioner Marie L. Ganim. “So we started working in the summer.”

Ganim said the legality of CSR payments from the federal government to insurance companies had been in doubt with challenges from Congress and a court ruling declaring the payments to insurance companies as illegal.

However, the subsidy payments to people purchasing insurance are still required of the insurance companies by the Affordable Care Act, Ganim said. The federal CSR reimbursements were meant as a means of keeping insurance companies in the health insurance exchanges.

But the Affordable Care Act also presents a work-around to the loss of CSRs. Rather than spread the loss in federal subsidies among all insured Rhode Islanders, Ganim said, OHIC has asked the insurers to add the increases to the 2018 Silver plan, where many of the state’s 17,000 low-income families are enrolled. The federal government is legally required to limit premiums to less than 10 percent of those families’ income, Ganim said.

About 1,400 Rhode Islanders who are enrolled in silver plans but are above the income cap, those making $90,000 for a family of four, for instance, will see an average 20 percent increase in their premiums, which the federal government will not be obligated to cover. Ganim said those 1,400 families can avoid the hike by moving into bronze plans, or by purchasing insurance outside the exchange. Moving to a gold plan will not necessarily save them money, she said, but it may be a good option depending on the individual.

The most vulnerable low-income Rhode Islanders will not feel the cost hike, Ganim said, but subsidizing the low-income families’ health insurance is more expensive this way.

“The federal government will feel it,” said Ganim, to the tune of nearly $200 billion across the country over a decade.

In fact, a Congressional Budget Office report estimated the strategy for fulfilling the ACA mandate controlling consumer costs would increase the federal deficit, on net, by $194 billion from 2017 through 2026.

Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.