On October 25, 2017

Federal upheaval won’t change 2018 health care premiums

By Erin Mansfield, VTDigger

The state’s top health care regulator says insurance prices on Vermont Health Connect will remain steady for calendar year 2018, despite recent actions at the federal level.

Kevin Mullin, chair of the Green Mountain Care Board, said Monday that the board would not allow insurance companies to raise premiums for plans effective in calendar year 2018 even though the federal government is holding back subsidies for the health exchange that will likely increase costs for insurance companies.

President Donald Trump has said he will stop federal payments to insurance companies, known as cost-sharing reductions, that help up to 13,000 Vermonters afford out-of-pocket health care costs. Insurers have said the pullback on funding will destabilize the health care exchange insurance market under Obamacare.

“The biggest [reason] is the timing of it because it’s just before open enrollment, which starts next week” on Nov. 1, Mullin said. State officials have already put together outreach material to help people understand that their premiums are based on the already-approved 2018 premiums. “To throw chaos back into the exchange makes absolutely no sense,” he said.

Open enrollment is the once-a-year period when Vermont Health Connect customers can change their plans for any reason. People who do not have insurance can also sign up during this time period. This year, open enrollment will run from Nov. 1 to Dec. 15.

The Green Mountain Care Board regulates health insurance premiums, including the premiums on Vermont Health Connect. For the 2018 plan year, the board decided to approve premiums with the assumption that the federal cost-sharing reductions would be fully funded.

In light of the defunding, Mullin said other states allowed insurance companies to increase premiums for the mid-level Silver plans on exchanges because insurers were able to raise rates without affecting low-income customers.

That’s because the customers are eligible for a second type of federal subsidy designed to make sure that customers only pay a certain percent of their income for their health insurance. If the underlying insurance premium is higher, low-income customers pay the same amount out of pocket, and the second federal subsidy picks up the rest.

“That wouldn’t work for Vermont, so we didn’t have that option that any of the other states had,” Mullin said.

In Vermont, the insurance pool for exchange participants is combined with the insurance pool for small business employees. If Vermont increased the prices of Silver plans, small business employees would pay significantly more in premiums if they selected the Silver plans, he said.

The state’s two insurers, Blue Cross Blue Shield of Vermont and MVP, receive about $12 million per year under the Affordable Care Act to pay for federal cost-sharing reductions, according to the Department of Vermont Health Access. Federal law keeps them on the hook for providing cost-sharing reduction benefits to Vermont Health Connect customers, even without the funding.

In the short-term, Mullin said insurance companies will need to tap into their reserves to absorb the loss. If the companies want to be reimbursed for giving that benefit in calendar year 2018, and the last few months of 2017, Mullin predicts they will ask to increase 2019 premiums further than otherwise.

Blue Cross Blue Shield of Vermont, which insures about 90 percent of Vermont Health Connect customers, had $135.3 million in reserves at the end of 2016, according to Sara Teachout, the company’s spokesperson. In 2016, the company received $7 million to provide federal cost-sharing reduction subsidies to about 9,300 customers, she said.

Teachout said Blue Cross has not decided internally whether to file documents with the board asking to increase premiums for calendar year 2018. She said the company hoped to already have some direction from the Green Mountain Care Board on what to do about the cost-sharing reduction payments.

“I guess it’s unfortunate that Vermont didn’t have a contingency plan like a lot of other states did,” Teachout said. “We recognize, along with [Mullin], that we’re really, really close to open enrollment and the timing of the federal announcement was poor. It couldn’t be a worse time really for us to try and make changes.”

While the company can still ask for an increase, she said the board may not approve the increase. “The chair of the board has said, ‘no,’” Teachout said. “I don’t know if he’s speaking for all the members of the board or if there would be a different outcome if we filed a motion. I guess we would have to find out.”

Mike Fisher, the chief health care advocate for Vermont Legal Aid, says it’s a good idea not to modify the premiums for insurance companies because Vermont Health Connect may not be able to handle such a sudden change.

“I think [allowing premium changes now] would put added pressure on a system that doesn’t need additional pressure, and in the meantime the carriers have reserves that are there for just this purpose,” Fisher said.

Sean Sheehan, the spokesperson for the Department of Vermont Health Access, encouraged people to sign up for Vermont Health Connect as soon as possible. The state’s updated plan comparison tool can help Vermonters find out which insurance plans are right for them.

“We’re really encouraging people to do their homework as soon as they can, and we’re trying to get all of the materials and information out to them as soon as we can,” Sheehan said.

Fisher said Vermonters should know that subsidies are still available. “I know it’s been confusing to consumers, but the supports are still available to them,” he said, “supports that help them pay for their premiums and supports that help them pay for their out-of-pocket costs.”

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