West Virginians whose incomes are four-times the federal poverty level and who aren’t covered by an employer’s health insurance plan will pay significantly higher insurance premiums next year.
West Virginia Insurance Commissioner Allan McVey said last week that he approved rate increases, to begin in January, for the two insurance companies in the state that sell plans through the health insurance marketplace. He approved the increases, in part, because he expected the Trump administration to halt payments for a controversial cost-sharing reduction program.
Highmark will sell plans with 25.6 percent higher monthly premiums beginning in January, and CareSource will sell plans with 19 percent higher monthly premiums.
The health insurance marketplace is where people who make too much for Medicaid and aren’t covered by employer plans can purchase private insurance. It’s accessible online at Healthcare.gov. Plans must meet standards established by the Affordable Care Act.
McVey said he approved the increases assuming that the Trump administration would not pay insurance companies cost-sharing reductions. The Affordable Care Act, passed in 2010, required the federal government to pay cost-sharing reductions — in other words, financial assistance to insurance companies in exchange for selling cheaper “silver” insurance plans to people who make up to 250 percent of the poverty level. Silver plans are moderately expensive plans sold through the federal marketplace.
“I think what the Affordable Care Act attempted to do was, basically, make insurance affordable for those most fragile people in our state and the country,” McVey said.
House Republicans sued the Obama administration over the cost-sharing reductions requirement. In May 2016, a federal judge held that the government did not have the authority to make the cost-sharing payments but allowed it to continue making them pending an appeal. The Obama administration appealed, and in February 2017, an appeals court agreed to put the case on hold until a resolution was reached.
On Thursday, the Trump administration announced that it would not make the cost-sharing payments.
About 87 percent of the 30,000 Highmark customers will still be eligible for tax credits on premiums because of their income, according to Jim Fawcett, president at Highmark West Virginia. Those tax credits are for people who have incomes up to 400 percent of the federal poverty level, which, in 2017, was $98,400 for a family of four.
Those tax credits will increase because they are linked to the cost of premiums. As premiums go up, so do the tax credits. This means the significant increases McVey approved possibly would not be felt as harshly for people below 400 percent of the poverty level who qualify for the tax credits.
The Congressional Budget Office predicted in August that the “increases would primarily be borne by the federal government in the form of larger premium tax credits.”
Renate Pore, a former director of the Governor’s Health Care Planning Commission and one of the founders of the Healthy Kids and Families Coalition, said in an email that the “increase in premiums would be offset by higher federal payments.” She said “the middle class without employer coverage is most hurt by this.”
Fawcett also said about 13 percent of people not eligible for tax credits would be most affected. He said he “wouldn’t venture a guess” as to whether other people’s premiums would increase, since premiums are tied to income, plan choice and other factors.
Fawcett attributed the premium increases to:
The approximately 5 percent of customers who are high-risk/sick and account for more than 50 percent of payouts
The rising cost of health care, exacerbated by obesity, tobacco use, stress and opioid abuse in the state
Highmark’s anticipation that the Trump administration would weaken the individual mandate, a provision of the Affordable Care Act that requires all Americans to have health insurance
Highmark’s anticipation that the Trump administration would not pay cost-sharing reductions.
“President Trump needs to provide leadership and call on Congress to appropriate the money for the cost-sharing reductions so we can get premium reductions,” said Perry Bryant, founder of West Virginians for Affordable Health Care.
McVey and Fawcett said that, had the Trump administration continued the payments, monthly premiums would have increased by 15 percent, instead. McVey said that would have been a reasonable rate increase, based on medical inflation and increasing costs of care.
McVey said members of Congress have introduced bills that would appropriate money for the payments, and that insurance companies have agreed to reduce their rates if such money is appropriated. The National Association of Insurance Commissioners has urged Congress to stabilize the market by appropriating money through legislation.
“We’re trying to get them to do it,” McVey said, “because we think it’s the right thing to do, at this point.”
The Congressional Budget Office predicted in August that, if the payments stopped, most insurance commissioners would let insurers raise premiums, but only for silver plans.
“I can only say, on behalf of our members, we’re looking for some stability,” Fawcett said.
“Whether it’s this current program or something new. It’s very volatile right now, and one thing about the insurance market — volatility does not produce good results.”
Highmark has discussed leaving West Virginia’s health insurance marketplace altogether, Fawcett said.
“We do take seriously our mission of serving all West Virginians in all 55 counties,” he said, “but it has to be in a way that’s sustainable.”
People will be able to see the new rates online on Nov. 1 at Healthcare.gov.
CareSource denied an interview request. In a statement, a spokeswoman said the increase was based on “a number of factors, one of the key factors was the assumption that cost-sharing reduction subsidies would not be funded by the federal government.”
The rate increases approved by the insurance commissioner, and the president’s executive order, do not directly affect people on Medicaid, which covers nearly one-third of West Virginians.
Also Thursday, Trump, seeking to expand the use of plans that aren’t compliant with the ACA, signed an executive order asking federal agencies to propose new regulations or revise guidance to expand the number of association health plans, short-term insurance and health reimbursement arrangements.