Still grappling with uncertainty about the future of national health policy, officials at Massachusetts’ health insurance exchange said Thursday they will shield consumers from unusually high rate increases in 2018.
Rates will still rise for people who buy insurance through the state’s Health Connector, but less sharply than feared: 8.7 percent, on average.
Officials at the Connector had warned last week that premiums for individuals could soar an average of 24 percent next year if the Trump administration followed through on a threat to end government subsidies that help lower the cost of coverage for consumers.
It’s still unknown whether the federal government will continue paying the subsidies, but Connector officials said they chose not to subject consumers to “unwarranted” increases right now. The Connector offers plans to individuals who don’t receive coverage through employers.
The Trump administration still could choose to stop paying the subsidies, causing an unusual scenario in which Connector insurance rates could rise in the middle of the year. That could result in confusion and inconvenience for tens of thousands of people.
“We will continue to monitor the federal conversation around [subsidies] and continue to formulate a plan in case that funding is eventually halted,” Louis Gutierrez, executive director of the Connector, said in a statement.
Individuals can start shopping for 2018 coverage on Nov. 1, when the open-enrollment period begins. Here’s what you need to know about health insurance costs on the Connector:
What are these government subsidies, and why are they at risk?
The subsidies, known as cost-sharing reductions, were included in the Affordable Care Act to help defray the cost of insurance for people who buy coverage individually. Although the president and Republicans in Congress have so far failed to gut the law, as promised, the Trump administration has control of the insurance subsidies.
That’s because of a lawsuit filed by House Republicans against the Obama administration challenging the legality of the payments. A court sided with the Republicans, but the ruling is on hold while the case is being appealed. The Trump administration could decide to drop the appeal and stop paying the subsidies. The president has called them “bailouts” for insurance companies.
In Massachusetts, the subsidies are expected to total $146 million next year, to be paid to insurers including Tufts Health Plan, Neighborhood Health Plan, Boston Medical Center HealthNet Plan, and others.
The payments to insurers help offset the deductibles and other out-of-pocket costs for individuals in Massachusetts earning up to $30,150 a year, and families of four earning up to $61,500.
What does this mean for consumers?
Most of the people who get subsidized coverage on the Connector also receive tax credits to help defray their costs. So when insurance rates rise, the increases are felt most by individuals who buy insurance on the Connector but do not receive tax credits. In Massachusetts, that includes more than 80,000 people.
All together, the Connector serves more than 253,000 individuals with health insurance. It also sells plans to small businesses.
Because of the swirling uncertainty around the future of insurance subsidies, officials at the Connector and the state Division of Insurance had taken the unusual step of approving two sets of insurance rates — one in case the subsidies continue, and another if they end.
They waited until Thursday to choose the “standard” rates -- the ones that assume federal subsidies will continue. By making this choice now, Connector officials are trying to keep the enrollment process for 2018 as normal as possible. But they’re taking the risk that government subsidies will disappear, and they may have to impose a mid-year rate hike, causing major disruption for members. The state agency would have to manage that disruption, including the possibility that thousands of people will try to switch into lower-cost health plans in the middle of the year.
On average, premiums for mid-level Connector plans are scheduled to increase 8.7 percent on Jan. 1. In an ordinary year, that number likely would have raised more concerns. The Division of Insurance, which approves rates, did not respond to questions Thursday about why prices are increasing at that clip.
What will happen with the government subsidies?
For now, that is up to the Trump administration. Health insurers, consumer advocates, and many politicians have been pushing for legislation to guarantee the payment of the subsidies and help stabilize insurance markets. Governor Charlie Baker was among five governors to testify before US senators last month and urge them to keep the payments flowing.
“Governor Baker, along with a bipartisan group of governors, called on Congress to develop sensible health care reforms,” a spokeswoman said Thursday.
The state has also asked the Trump administration for permission to create a special fund to help stabilize insurance rates in Massachusetts in case the federal subsidies end.