Local healthcare prices skyrocket as Trump tries to kill ACA
Marylanders getting “Silver” plans from the state’s online health insurance exchange face a second round of premium hikes for 2018 following President Donald Trump’s Oct. 12 order stopping federal payments to health insurers to fund discounts for moderate-income patients.
For a few people, the new rates will be 76 percent more than 2017 levels.
The Maryland Insurance Administration (MIA) Wednesday approved emergency rate increases for CareFirst BlueCross BlueShield and Kaiser Permanente Mid-Atlantic, the state’s only two carriers serving the online exchange market for individual coverage. The emergency stemmed from the narrowness of the time frame between Trump’s action and when the annual “open season” begins for buying coverage on the Maryland Health Benefit Exchange on Nov. 1. Silver plans generally provide a middle level of coverage for mid-range monthly premiums.
Despite the large rate hikes from 2017 to 2018, Insurance Commissioner Al Redmer Jr. explained in an Oct. 23 telephone press conference that few people will pay the increases from their own funds. Most people to be charged the higher premiums will have the increases offset – completely or in large part – by higher tax credits, he said.
The Affordable Care Act, which has been referred to as Obamacare, provides the refundable credits to people with incomes up to four times the federal poverty level ($98,400 for a family of four, four times the poverty level of $24,600), to help pay monthly premiums for plans purchased on the exchange.
Redmer said open season in Maryland would start as planned on Wednesday, Nov. 1. He said most people with health coverage are unaffected by either round of rate hikes in the individual market. People on Medicare and Medicaid and on large employer health plans don’t use the exchange. Small employer plans use a separate portal in the online exchange which has much smaller rate hikes for 2018, many in the 2 percent to 3 percent range.
In early September, as reported then by the Sentinel, Redmer approved rate hikes for the entire individual market, covering people buying insurance through the exchange, direct from insurers, or through brokers. For Silver plans, those increases averaged 23 percent over 2017 rates for Kaiser, 31 percent for CareFirst health maintenance organizations and 52 percent for CareFirst preferred providers organizations.
In the second round of increases, MIA approved average Silver-exchange plan rate increases of 43 per cent over 2017 rates for Kaiser, 58 percent for CareFirst HMOs, and 76 percent for CareFirst PPOs. MIA gave the market shares of the three plans: CareFirst HMOs, 54 percent; Kaiser, 43 percent; and CareFirst PPOs, 3 percent.
The premium rate hike (before tax credit offsets) for a 40-year-old single nonsmoker in Montgomery or Prince Georges County on the CareFirst HMO Silver plan will be $111 per month, from $354 to $465 per month, according to MIA data. For Kaiser, the comparable increase will be $64, from $309 in 2017 to $373 in 2018.
MIA chief actuary Todd Switzer told the Sentinel that approximately 96,000 people in Maryland are projected to buy Silver plans through the online exchange, and they are the only ones the second round of rate hikes will affect. The second round increases will be the same for all Silver plan exchange buyers.
Of the 96,000, Switzer said, 73,000 are eligible for both the mandatory discounts and the offsetting tax credits because their incomes are up to 250 percent the federal poverty level ($61,400 for a family of four). The tax offsets protect these subscribers from nearly all the second round of rate hikes.
Most of the other 23,000 will be eligible for tax credits, but, Switzer noted, the credits go down as income increases, reducing the “shielding” such people get against the rate increases.
Some of the 23,000 (Switzer didn’t give a number) have incomes more than four times the poverty level, and don’t get any “shielding” from tax credit, he continued. This last group now has an incentive to buy Silver plans off the exchange. The few who do not follow this incentive will have to pay the full second-round increase out of pocket, he said.
People buying Bronze or Gold plans on the exchange, and eligible for the tax credits, will get them—at increased levels because of Trump’s action—although they are not subject to the second round of premium hikes.
In fact, the Associated Press quoted experts at the Urban Institute and Oliver Wyman Consulting, saying Bronze consumers in many states will get free coverage (the tax credits fully offset their premiums), and Gold consumers will get their plans at the price of Silver coverage. The Congressional Budget Office has estimated that cutting off discount reimbursements to insurers would cost the federal government almost $200 billion over 10 years.
Redmer said the second round of increases is needed because without it, the two carriers, CareFirst and Kaiser, would lose about $100 million through the end of 2018 because of Trump’s action. Even with the rate increases, Redmer said, the two carriers would lose money by providing coverage in Maryland’s individual market.
Maryland law requires the MIA to approve insurance rates adequate to meet the costs of coverage, he added.