Mass. health insurers uneasy over Trump’s threat to cut subsidies
Health insurance subsidies that help about 155,000 lower-income Massachusetts residents pay for their coverage are at risk if President Trump makes good on his threat to cut off the payments promised under the federal Affordable Care Act.
The payments to Massachusetts insurers are expected to amount to about $132 million next year, helping people buy coverage through the state insurance exchange, called the Health Connector.
But as the drama around national health policy continues in Washington, insurers across the country don’t know whether the subsidies will keep flowing, and for how long. The payments are made monthly and the next one is due in about two weeks.
An abrupt cutoff of the subsidies could further destabilize insurance markets by forcing insurers to raise their rates, which would make insurance less affordable for families on the lower end of the income scale.
Health care advocates predict that if the Trump administration axes the subsidies, the rate of people without insurance will rise.
“The cost-sharing reduction payments are critical for keeping coverage affordable for people buying individual coverage for themselves and their families,” said Brian Rosman, policy director at Health Care For All, a Boston nonprofit. “We know that uninsurance would increase in Massachusetts if the payments are not made.”
Massachusetts insurers already have filed the rates they expect to charge in 2018, and state regulators are expected to approve them in mid-August. The rates may change if Trump follows through on his threat.
“This has been a roller coaster,” said Lora M. Pellegrini, president of the Massachusetts Association of Health Plans.
Several local insurers rely on federal subsidies: Tufts Health Plan, Neighborhood Health Plan, Boston Medical Center HealthNet Plan, Fallon Health, Health New England, CeltiCare Health Plan, and Minuteman Health.
As required by state regulators, insurance companies already have calculated how much they will charge for coverage next year. If they lose the subsidies, they will have to raise premiums by about 19 percent, Pellegrini said.
And if that happens, insurers also will have to scramble to get the word out to members, so they can decide whether to stick with the same plans or move to less expensive options.
The subsidies are provided through the Affordable Care Act, President Obama’s signature health care law, which extended health coverage to millions of Americans. Trump and other Republicans campaigned on repealing and replacing the law, which they blame for driving up costs. The US House passed a health care bill earlier this year, but a repeal bill failed in the Senate last week.
The subsidies are at risk because of a lawsuit filed by House Republicans against the Obama administration. The suit alleged that subsidies were illegal because Congress never approved the expenditure.
A court sided with the Republicans, but the ruling is on hold while the case is being appealed. The Trump administration must decide whether to continue the appeal that began under Obama.
Trump has continued his assault on the law, which he and others call Obamacare. He tweeted last week: “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies … will end very soon!”
Insurers don’t see the government subsidies as “bailouts.” The payments 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.
“We have a contract that says [the government] will pay this money to support this coverage,” said Christopher “Kit” Gorton, president of Tufts’ public plans division. “That’s not a bailout.”
Tufts relies on the subsidies, known as cost-sharing reductions, or CSRs, more than any other Massachusetts insurer. It provides subsidized insurance to 96,000 members.
“This is close to a half-billion dollar business for us, and we can’t plan for it any normal business way,” Gorton said.
Insurers are encouraged by signs that there appears to be bipartisan support for keeping the payments in place.
Massachusetts Governor Charlie Baker, a Republican, and Virginia Governor Terry McAuliffe, a Democrat, urged immediate action to help stabilize the insurance markets this week. Baker and McAuliffe lead the National Governors Association’s Health and Human Services Committee.
“A first critical step in stabilizing the individual health insurance marketplaces is to fully fund CSRs for the remainder of calendar year 2017 through 2018,” the governors said in a statement.
As the uncertainty continues, insurers and state officials are closely following what happens in Washington. Jason Lefferts, a spokesman for the state Health Connector, said any change in federal policy would not affect policies this year.
“We are working closely with the Baker-Polito administration and with the Division of Insurance and insurance carriers to explore a re-rating process for 2018, if necessary, as part of our goal to limit disruption to ConnectorCare members and our insurance market,” Lefferts said.
ConnectorCare is the Connector program that provides subsidized insurance. In addition to subsidies paid to insurance companies that help lower their costs, members of the program also receive tax credits to offset the cost of premiums.