Loss of low-income subsidies in R.I. would push up health-insurance premiums

2017-08-13 | The Providence Journal

Aug. 13--PROVIDENCE, R.I. -- Rhode Islanders who were relieved when Congress failed to repeal the Affordable Care Act could be in for a rude awakening.

President Donald Trump and Republicans in Congress have threatened to cut billions in federal subsidies for Obamacare that help low-income Americans buy coverage. If they follow through on their threat, insurers say, premiums would rise more than expected for 2018.

Rhode Island insurers last year received about $18 million in these subsidies, known as cost-sharing reductions, for absorbing the cost of reduced deductibles and copayments for low-income residents.

More than half of the 29,300 residents who buy coverage on the exchange -- about 16,400 people -- qualify for the federal cost-sharing subsidies, according to Kyrie Perry, a spokeswoman for the state exchange, HealthSource RI.

Even if the federal government stops the subsidies, insurers are still required by law to offer the reduced-cost coverage for low-income residents who earn up to 250 percent of the federal poverty level -- up to $30,150 for a single adult or $51,000 for a family of three. That means insurers would either have to take a big financial hit or make up the money elsewhere.

"As a business, we have to make sure we remain financially healthy, because we provide services for over 200,000 Rhode Islanders," said Peter M. Marino, president and chief executive officer of Neighborhood Health Plan of Rhode Island. To offset the loss of the federal cost-sharing subsidies, he said, Neighborhood estimates it would have to raise premiums, on average, "somewhere between 15 percent and 20 percent."

"An increase like that in Rhode Island and across the country would force a lot of people out -- they would be uninsured," Marino said. "We certainly don't want to see that happen."

(Neighborhood had assumed that the cost-sharing subsidies would continue, he said, when it asked last month for a 5-percent rate hike, on average, for its individual plans in 2018.)

Blue Cross Blue Shield of Rhode Island -- which in July requested a 13.9-percent rate increase, on average, in its 2018 rates -- did not disclose how much more its premiums might rise if the subsidies are eliminated, except to say that they would be "significantly higher."

The cost-sharing reductions "play a vital role in helping low- and moderate-income residents, who do not qualify for Medicaid, gain access to quality health care," Gail Carvelli, a Blue Cross spokeswoman, said in an email.

Rhode Island's new health insurance commissioner, Marie L. Ganim, said Tuesday that her office has begun making "contingency plans" in case the cost-sharing subsidies are eliminated.

The commissioner has asked Neighborhood and Blue Cross to submit alternate rate proposals in the event that they lose the federal subsides. Blue Cross' rate increase "would not be [as] dramatic" as the double-digit estimate from Neighborhood, Ganim said, since Blue Cross has fewer low-income customers on the state exchange.

Another option discussed by state insurance commissioners who met in Philadelphia earlier this week at the National Association of Insurance Commissioners, Ganim said, is to load all of the extra costs into the prices charged for one plan on the state exchange that qualifies for federal tax subsidies. Tax credits generally increase along with the price.

Ganim said she is encouraged by the efforts of a coalition of attorneys general to preserve the cost-sharing subsidies.

Last week, the U.S. Court of Appeals for the District of Columbia Circuit ruled that 16 state attorneys general -- including those in Massachusetts, Connecticut and Vermont -- may intervene to appeal a decision in a 2014 lawsuit filed by the GOP-led House. The suit contends that the subsidies are unconstitutional. After a federal district court ruled in the House's favor in 2016, the Obama administration appealed to the D.C. Circuit Court.

Rhode Island Attorney General Peter F. Kilmartin is "supportive of their efforts," though he did not join the action led by New York's attorney general, his spokeswoman, Amy Kempe, said in an email.

"The office was not provided sufficient time to properly review and evaluate the complex legal issues as they pertained to Rhode Island prior to the deadline to become party to this legal action," Kempe said. "If an opportunity presents to more formally intervene, the office will pursue that step."

-- larditi@providencejournal.com

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