States and insurance companies scrambled to raise premiums for insurance plans sold on the Affordable Care Act exchanges -- even as Senate leaders reached a deal on Tuesday that would fund the subsidies in the short term.
The subsidies, called cost-sharing reductions — or CSRs — are federal payments to insurers that are used to offset deductibles and other out-of-pocket health costs for lower-income Americans.
The White House announced it was ending the subsidy payments late last week, injecting new uncertainty into insurance marketplaces.
President Trump expressed support for Tuesday's bipartisan deal. But with the timing and trajectory of that deal unknown, insurers -- which are still obligated to sell the plans even if the subsidy payments end -- were preparing to make up the difference by requesting higher premiums for next year. The quickly approaching open enrollment period beginning in November added urgency to the situation.
In many states, insurance companies had already priced in a possible end of CSRs to their rate requests, anticipating President Trump's move. In others, however, regulators explicitly asked companies to assume that the payments would be made — or gave little direction, leaving some insurance companies pushing for higher rates at the last minute.
North Dakota insurance commissioner Jon Godfread announced that insurers in that state would not be allowed to refile for higher rates. He said he made the decision to protect people who do not receive a second type of subsidy -- premium tax credits that defray the cost of their health insurance.
"This is an issue that is between insurance carriers and the federal government, and while I understand the strain you are under in participating in this marketplace, it is my duty to look out for those consumers who have had to absorb multiple rounds of increases to their health insurance premiums without receiving any assistance from the federal government," Godfread said in a statement.
One North Dakota insurer, Medica, decided in September not to remain on the exchange, although it will still sell individual plans off the exchange, where people cannot access premium tax credits. Another, Blue Cross Blue Shield of North Dakota, said it would still sell health plans on the marketplace, despite the fact its rates were approved based on the assumption the cost-sharing subsidies would be paid. A third, Sanford Health Plan, said in a statement that it is "weighing all of our options."
"We expect that premiums may increase in 2019 as a result of these activities, however the full impact will not be known until we understand our 2018 membership and their utilization of health care services," Andrea Dinneen, a spokeswoman for Blue Cross Blue Shield of North Dakota said in a statement.
Rhode Island had approved rates based on the assumption that the federal payments would continue. In the days since last week's announcement that the payments would end, the insurance commission is working through an elaborate procedure to replace the original rates with higher ones that the commissioner told the state’s two insurers in its ACA marketplaces to prepare over the summer, just in case.
“It’s not as easy as pressing a button,” said Cory King, the Rhode Island insurance commissioner’s principal policy associate. For Blue Cross Blue Shield of Rhode Island, the insurers with more customers, the change will cause the premium increase for “silver” tier plans – the level eligible for cost sharing reductions – from about 12 percent to about 30 percent.
In Montana, regulators had left it to insurance companies to make their own assumptions about next year. Two of the three insurers on its exchange had assumed the payments would be made and filed for relatively low, single-digit percentage average rate increases for next year.
On Monday morning, the Centers for Medicare and Medicaid Services gave notice to the state of Montana that health insurers could refile their rates to adjust for the loss of the subsidies.
Montana Health Co-Op, which had filed for an average 4 percent increase on its plans next year requested to raise the premium for silver plans by another 24 percent. PacificSource Health Plans, which had filed for an average 7.4 percent increase on its Montana plans, requested another 11.3 percent raise to its silver plans.
“My department was advised by both companies just months ago, that with or without CSR payments, they would be able to honor the rates they provided to us and the public. Today, by their actions, they inform me that was not true,” Montana securities and insurance commissioner Matt Rosendale said in a statement.
Insurers have expressed varying degrees of frustration with the process.
Ken Provencher, president of the regional insurer, PacificSource Health Plans, said that in the three states where his company sells plans on the exchange the regulators all asked for slightly different assumptions regarding whether the payments would be made.
“The great ironic thing is that we actually struggled in the individual market in the first three years of the ACA and constantly refined our strategy. In 2017, we've actually seen some stability,” Provencher said. “We feel like we're in a reasonably comfortable place to offer coverage to the market.”
In Idaho, Provencher's company filed two sets of rates, one with subsidies and one without.
Montana did not specify which scenario insurers should use, and PacificSource's filing assumed that the payments would be made — leading it to push for the state to approve higher rates after the subsidies were discontinued late last week.
In Oregon, health insurers had filed rates assuming the payments were coming. But the state, anticipating Trump's move, had done the groundwork to figure out what sort of a premium increase would be necessary should they be canceled. By Friday afternoon, Oregon officials had already instructed insurers who participate on the exchange to file for a 7.1 percent increase for all silver plans, on top of the already-approved 2018 rates to compensate for the loss of CSRs.
“We've been preparing for this type of action since the day the administration hinted it might happen,” said Jake Sunderland, a spokesman for Oregon's Department of Consumer and Business Services. “We'd already done the math and had a pretty good idea of what increase would be necessary to compensate for the missing funding.”
In Arizona, the two insurers that provide plans on the exchange filed their rates for next year with different assumptions about whether CSRs would be in place. But Arizona Department of Insurance spokesman Stephen Briggs said that BlueCross BlueShield of Arizona, the company that had filed assuming the payments would be made, had informed regulators they felt comfortable with their rate, either way.
Other states were still working toward a solution. Massachusetts asked insurers to submit two sets of rates, but approved standard rates assuming CSRs would be paid hours before the White House made the announcement they'd be ending. A spokesman for the Massachusetts Health Connector did not have an update Tuesday afternoon.
Maryland, which asked insurers to assume the payments would be made, was working toward making a decision on what to do about whether to permit higher rates.
In Washington, insurance commissioner Mike Kreidler sent a letter to insurers Monday instructing them to submit higher rates that account for cost-sharing reductions. Rates will increase between 9 percent to 27 percent without the payments, according to spokesman Steve Valandra.
Amy Goldstein contributed to this story.