Federal subsidies still uncertain

Covered California is moving forward with its health insurance exchange for 2018 despite the turmoil and inconsistency coming from Washington, D.C.

Last, month Covered Cal announced its prospective premiums for 2018. While the average increase statewide for next year is 12.5 percent, within the Inland Empire region (which includes Riverside and San Bernardino counties), the average increase is 17.2 percent.

Across all plans, one factor built into these rates is a one-time adjustment because of the end of the “holiday” on health plans having to pay the Patient Protection and Affordable Care Act’s health-insurance tax. This factor alone was worth an average of 2.8 percent. Without the one-time HIT increase, the average increase for the health plans Covered California contracts with would have been less than 10 percent.

Anthem has withdrawn from all of Southern California, including the Inland Empire, which is about half of its market. About 5 percent of the Inland enrollment purchased Anthem’s policies.

Companies still offering health insurance through the exchange are Blue Shield, Health Net of California, Kaiser Permanente and Molina Healthcare.

Molina’s premiums proposed the greatest increase, between 27 and 42 percent. The smallest increase was Kaiser’s 6 to 10 percent change.

Beginning next year, policy holders with Silver 94, Gold and Platinum plans will have lower out-of-pocket costs, according to the release. For example, Platinum holders will have a lower copay when seeing a specialist. Gold policies will have lower copays for primary-care and urgent-care visits.

“Covered California remains robust and strong, and we are pleased to welcome back all 11 plans to compete in regions across the state,” said Covered California Executive Director Peter V. Lee. “While there is ongoing uncertainty and a lack of clarity at the federal level, consumers who need affordable health insurance will continue to have good choices in Covered California next year.”

Lee said the average statewide rate change for 2018 will be a 12.5-percent increase and noted that consumers can reduce that amount to less than a 3.3-percent increase if they shop for the best value and switch to the lowest-priced plan in the same metal tier.

One year ago, the premium increases were reversed. The statewide increase was 13.2 percent and only 10 percent within the Inland Empire.

During 2017, nearly 130,000 individuals had healthcare coverage through Covered California’s exchange and 90 percent received some financial assistance to pay their premiums.

The open enrollment period will begin Nov. 1 and end Dec. 15 for policies that become effective Jan. 1, 2018.

Covered Cal and the federal role

The announced premiums are based on the assumption that the federal government will continue to reimburse health-insurance companies for cost-sharing reductions that lower premiums for lower-income individuals and families.

However, the intentions of the current administration are unclear. Neither the Department of Health and Human Services nor the Centers for Medicare and Medicaid Services have stated whether they will continue the payments after Jan. 1.

At times, President Donald Trump has suggested he might order their termination.

In a letter to HHS Secretary Tom Price and CMS Administrator Seema Verma, Lee wrote, “Given that uncertainty, Covered California instructed health insurance companies to submit their rates assuming continued direct payment to fund the CSR subsidies, but to also submit a separate CSR surcharge to ‘load’ any costs to fund this program onto Silver-tier, on-exchange plans. As a result, Covered California’s Silver-tier consumers may see an additional ‘CSR surcharge’ that averages 12.4 percent – and ranges from 8 percent to 27 percent on the gross price of their premiums.”

Lee concluded with the following admonition: “While Covered California has crafted a ‘work-around’ that will maintain health plan participation in the individual market in 2018 and protect consumers who depend on this benefit, this is far from an ideal solution. There will be consumer confusion which will likely cause some consumers to drop coverage and additional costs to the federal government.”

He argued that the additional federal costs from higher-premium tax credits would be 23 percent or $2.3 billion more than making the cost-saving reduction payments.