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CSR uncertainty could cause 9.4M uninsured, 37% premium increase, report says

Insurers must decide whether to assume CSRs will continue, increase premiums, or leave market.

Susan Morse, Associate Editor

Senate committee Chairman Lamar Alexander speaks with state health insurance commissioners on Wednesday. Credit: C-SpanSenate committee Chairman Lamar Alexander speaks with state health insurance commissioners on Wednesday. Credit: C-Span

Should the Trump administration end cost-sharing reduction payments to insurers, causing those payers to leave the marketplace, average premiums could rise by nearly 37 percent in 2018 and the number of uninsured individuals could increase by 9.4 million, according to a report prepared by the Urban Institute with funding from the Robert Wood Johnson Foundation.

Funding for the Affordable Care Act's CSR payments was not approved by Congress. When Obama was president, GOP leaders brought a challenge to the Supreme Court over federal money being paid out that was was never legislatively appropriated. Republicans won their case, and when Trump became president, CSRs fell within his purview to continue or end.

[Also: Governors tell Senate committee they support state control, CSR payments and reinsurance]

Insurers have said a guarantee that the payments will continue is needed to stabilize the market, ensure they'll remain on the exchanges, and to keep premiums from skyrocketing.

Currently a Senate Health, Education, Labor and Pensions Committee is debating whether to recommend the payments continue for one or two years, but the Trump administration could pull the funding at any time.

[Also: CMS extends ACA premium rate filing deadline due to change in CSR risk adjustment methodology]

Insurers have until September 20 to finalize their premium rates for 2018. Due to the uncertainty, the report analyzed three scenarios for the upcoming plan year.

The first scenario sees insurers placing a surcharge on silver marketplace premiums, which would increase silver premiums by 23 percent on average in 2018. Under this scenario, the insurers would be willing to remain in the marketplaces, and about 600,000 more people would enroll in coverage due to getting higher tax credits to pay for the premiums.

In the second scenario insurers exit the marketplaces in response to the loss of CSRs and other policy uncertainties such as a lack of clarity on enforcement of the individual mandate and a 90 percent cut in outreach enrollment assistance. Under this scenario, the number of uninsured people would increase by 9.4 million and nongroup insurance premiums would rise by nearly 37 percent.

[Also: Insurers file multiple scenarios for 2018 ACA premium rates due to uncertainty over CSRs, individual mandate]

Some states could deal with scenario one while others experience scenario two, the report said.

Under a third, unlikely scenario, the federal government would not reimburse insurers for CSRs and lawmakers would alter the ACA so that insurers are no longer required to pay CSRs to eligible enrollees. Four million more people would be uninsured, and nongroup premiums would rise by about 12 percent. This scenario would lead to increases in the number of low-income uninsured people, the report said.

"By this point, pricing strategies have been developed in the event that the cost-sharing reductions are not paid," said Katherine Hempstead, senior advisor at the Robert Wood Johnson Foundation. "Yet these contingency plans pose challenges for insurers, will be confusing to consumers, and ironically will probably cost the federal government more."

Insurers, through America's Health Insurance Plans, providers through the American Hospital Association and American Medical Association, and other groups have urged for continued CSR funding. Withholding it would cost the federal government more money in the funding of tax credits, than in CSR payments, they said. CSRs lower deductibles, copayments, coinsurance, and out-of-pocket maximums for people eligible for tax credits and with incomes below 250 percent of the federal poverty level.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

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