Uncertainty over the future of the Affordable Care Act is not helping health insurers prepare to offer ACA coverage next year. It also is not helping the more than 500,000 North Carolinians who depend on the ACA for access to health care.
At Blue Cross NC our actuaries are working hard to propose plans and rates for 2018 ACA coverage. But they have some unusual unknowns in the mix this year. This is because the future of the ACA is so unsettled in Washington.
Our ACA customers want to know what will happen to their premiums and choices of plans. So do all 10 million Americans who buy coverage through the federal exchange or a state-run exchange, and get a federal subsidy to help pay for it.
The Great Unknown
The biggest unknown that affects premiums and coverage for ACA customers for 2018 boils down to this: Will Congress ensure that federal payments continue for the program that helps certain lower-income ACA customers pay their out-of-pocket costs?
Under this program, ACA customers within certain income ranges can purchase “cost-sharing reduction” plans that have lower deductibles, copayments and coinsurance, and do so at a reduced premium level. The federal government then pays insurers to make up for below-market premiums. (The income ranges are $11,800 to $29,700 for an individual and $24,000 to $60,750 for a family of four.)
The House authorized but did not include funding for cost-sharing reduction plans when it approved the American Health Care Act on May 4.
With no funding for the federal payments for cost-sharing reduction plans, Blue Cross NC will need to factor the missing federal payments into our 2018 rates. That will drive more customers away from coverage and toward being uninsured. For some insurers, this additional pressure on premiums might lead to a decision to leave the exchange or the ACA market entirely.
If you have any interest in the future of the ACA, I suggest you read this analysis from the Kaiser Family Foundation. They predict that the average premium for a Silver plan on the exchange would have to be 19 percent higher than otherwise if cost-sharing reduction payments to insurers go away.
The vast majority of ACA customers in North Carolina have a Blue Cross NC plan since we are the only option on the exchange in 95 of the state’s 100 counties. As a result of two of our major competitors leaving the exchange market starting this year, we took on about 200,000 additional customers. At the close of the ACA enrollment period at the end of January, about 493,000 people had enrolled in one of our ACA plans.
Unfortunately the calendar does not give us much time to see how things play out in Washington. The rate filing is due this month. The state Department of Insurance’s actuaries will spend several months examining our proposal, asking questions of our actuaries and requesting additional information along the way. DOI will issue its decision, and we would then submit state-approved rate information to the federal government by mid-August.
We start from a position of wanting to offer coverage again next year. But participating requires that we avoid financial losses on our ACA business, which we suffered for the first three years of the ACA.
Our financial performance improved last year as our ACA losses fell. We need the ability to charge premiums sufficient to cover our costs, with something left for operating margin, to avoid a loss. Whether cost-sharing reductions are funded will have a large impact on how affordable or unaffordable those premiums are for our customers.
As the question over cost-sharing reductions becomes clearer and as the rate review process unfolds this summer and into the fall, we will be in better position to decide on offering plans on the exchange in 2018. We will keep everyone informed.