Pennsylvania insurance commissioner Teresa Miller visited all five of the health insurance companies selling plans on her state's Affordable Care Act exchanges earlier this year and said the conversation was almost identical at each one.
After a year in which companies had complained of huge financial losses and made dramatic exits in some states, things were looking up in Pennsylvania, the insurers told Miller. Last year, they'd received a 32.5 percent premium increase, on average, but they were cautiously optimistic they would make a far more modest request for 2018. There was one big caveat: the turmoil in Washington.
“If you take Washington out of the picture, our market is really stabilizing,” Miller recalled hearing from the companies. In June, the companies followed through on their optimism, requesting premium increases of just 8.8 percent on average.
But at Miller's request, they filed a second set of proposed premium increases, in case Washington took certain actions that undercut the market. Those requests were for a 36.3 percent increase on average.
President Trump has promised to “let Obamacare fail,” vowing that the law will crumble on its own as health insurers flee the market and seek unsustainably high premium increases.
But if premiums skyrocket, a big part of the reason could be because Trump flips the switch. The White House has repeatedly threatened to discontinue making billions of dollars in payments to insurers that help defray the cost of deductibles and out-of-pocket expenses for lower-income Americans.
Those payments, called cost-sharing reductions, have been projected to add up to $7 billion this year. The administration has also not committed to enforcing the individual mandate, which requires people to maintain health coverage or pay a penalty.
A White House spokesman said Wednesday that the cost-sharing reduction payments would be made on time this month, but the administration had not made a decision on whether to continue paying them long-term.
In Pennsylvania, five insurers asked for, on average, an 8.8 percent increase in premiums for individuals who buy their own health insurance. But under a scenario in which federal subsidy payments are withheld, they requested a 20.3 percent increase. If the individual mandate is repealed on top of that, they requested a 36.3 percent hike.
“What the president is doing is actually undermining the Affordable Care Act. It’s very disingenuous to say, ‘I’m going to sit back and let it fail,’ ” Pennsylvania Gov. Tom Wolf (D) said in an interview. “By virtue of … things he has already done and could do in the future, he’s actually destroying the Affordable Care Act, he’s not just letting it fail. He’s taking it to failure.”
An analysis by the Kaiser Family Foundation earlier this year found that discontinuing cost-sharing reductions could push the premium cost of a benchmark health plan up 19 percent.
But that number is becoming more tangible and possible as deadlines approach for insurers to agree to rates. Some insurers have modeled two scenarios for how much their premiums will increase next year: one if the status quo continues, and another if they fail to get money from federal subsidies or see no enforcement of the requirement to buy health coverage.
Blue Cross and Blue Shield of North Carolina said that if federal payments were made, its rate increase would be 8.8 percent. Without those payments, it requested a 22.9 percent increase.
CareFirst BlueCross BlueShield, the largest insurer in the Mid-Atlantic, requested a 52 percent average increase in individual insurance premiums in Maryland but warned that the rates could be pushed an additional 10 to 15 percent higher if cost-sharing reductions aren't paid.
Blue Cross Blue Shield of Tennessee told that state's insurance commissioner that if the status quo were to remain in effect, its rate increase would be “nominal.” Instead, the insurer requested a 21 percent rate increase, based on the assumption that federal cost-sharing reduction payments would not be made and the individual mandate would not be enforced.
Tennessee insurance Commissioner Julie Mix McPeak said that the recent discussion about a “repeal and delay” or letting the market fail is “causing a little bit of nervousness, and it's adding to the fragility of the individual market.”
Blue Cross Blue Shield of Michigan filed two sets of rates for its 2018 health plans, one with cost-sharing reductions and one without. If the federal payments continue, the average rate increases for one plan would be 26.9 percent on average. If they were taken away, that would go up to 31.7 percent. Its individual HMO plan would increase 13.8 percent on average with the federal payments, which would increase to 22.6 percent without cost-sharing reductions.
In Pennsylvania, Miller is worried that the political uncertainty is setting the stage for a repetition of what happened last year. The state was set to approve a 23.6 percent increase in premiums for companies last summer, but at the last minute, the companies returned with concerns because the market had yet to stabilize and the companies weren't sure they wanted to stay in the market. They pushed the state to agree to a much larger rate increase.
This year, if the political uncertainty causes insurers to seek bigger rate increases, that could encourage healthy people — particularly people who don't receive federal tax credits to help pay their premiums — not to buy insurance, leaving only the sick people buying plans. That makes the market less attractive for insurers.
“What I really don't want is to just simply not have options for consumers,” Miller said.