Business & Tech

Federal agency nixes Mass. request for special fund to stabilize health insurance rates

Governor Charlie Baker.
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Governor Charlie Baker.

Federal health officials have rejected a request from Governor Charlie Baker’s administration to establish a special fund to help stabilize health insurance rates in Massachusetts next year.

Baker administration officials sent their 84-page request in early September, worried that President Trump’s administration would end federal subsidies that help insurance companies discount coverage for lower-income Americans. The White House confirmed Oct. 12 that it would halt the subsidies, calling the payments unlawful.

Massachusetts officials wanted to use another pot of federal money to continue subsidizing insurance companies to try to avoid a spike in premiums that could disrupt consumers. They said their plan could have saved the federal government money.

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But officials at the Centers for Medicare & Medicaid Services in Washington said Monday that there was not enough time to carry out the request, known as a waiver.

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“An application for initial approval of a . . . waiver must be submitted sufficiently in advance of the requested effective date to allow for an appropriate implementation timeline,” federal officials said in a brief letter to Louis Gutierrez, executive director of the Massachusetts Health Connector. The letter was reported earlier by Politico.

Insurance rates for popular plans on the Health Connector, the state agency that sells coverage to individuals, are expected to jump about 24 percent next year. Most people who are covered by these plans will receive tax credits to help offset their costs, but about 80,000 are not expected to qualify for tax credits and could have to pay the full increase.

“While this waiver was not granted by the federal government, the Connector will evaluate the prospects of filing a similar waiver for 2019 and continue to talk to federal partners about other proposals,” Connector spokesman Jason Lefferts said Tuesday.

The enrollment period for individuals shopping for 2018 health coverage begins Nov. 1.

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Baker made the case for the special fund last month when he joined four other governors to testify before the US Senate Health Committee. Baker urged senators to take quick bipartisan action to protect health insurance markets by continuing the subsidies.

A group of senators recently came up with a bipartisan deal, but Trump has given mixed messages about whether he would support it.

Trump’s promise to end health insurance subsidies caused Massachusetts officials to raise insurance rates for individuals far more than usual. They had planned to raise rates about 8.7 percent, but after the White House decision, they opted for higher rates.

Massachusetts Attorney General Maura Healey has joined several other states to sue the Trump administration, arguing that it is required to continue the payments.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.