Insurance companies are getting nervous about President Donald
Trump’s saber rattling on healthcare.
Trump, in interviews and tweets in recent days, has raised doubts
about whether the White House will continue to fund the
Affordable Care Act’s so-called cost-sharing reduction (CSR)
CSR payments are
provided to insurers to defray the cost of offering
low-income Americans cheaper out-of-pocket costs on the
ACA’s individual insurance exchanges. The money is funneled
through the plans to providers to make up the difference in
copays or deductibles paid by Americans making 200% of the
federal poverty line or less. Any money not used to lower
the costs is returned to the federal government.
Currently, the roughly $8 billion in payments comes from the
White House rather than a congressional appropriation. The
payments have been the subject of a lawsuit between the
Republican-controlled House and the executive branch dating back
to the Obama administration.
Trump’s recent threats to cease the payments have
caused insurers and industry groups to
grow increasingly worried about potential losses
and their participation in the individual insurance markets.
Anthem, one of the big five public insurance companies,
said Wednesday that if CSR payments are not funded, they could
either raise premiums in the individual market by as much as 20%
or leave them altogether.
Anthem CEO Joe Swedish
said on the company’s earnings call that it was making
the assumption that CSR payments would be funded. He said the
company’s outlook would change if the payments are pulled.
“However, we are notifying to our states that, if we do not
have certainty that CSRs will be funded for 2018 by early June,
we will need to evaluate appropriate adjustments to our filing,”
Swedish said. “Such adjustments could include reducing service
area participation, requesting additional rate increases,
eliminating certain product offerings or exiting certain
individual ACA-compliant markets altogether.”
Other major insurers such as Aetna and Cigna also
warned earlier in the year that their participation in the
exchanges would be based on the payments. Aetna already
announced it would pull out of Iowa’s marketplace.
Mario Molina, the CEO of Medicaid-focused insurer Molina
wrote a letter to congressional leaders on Thursday about the
CSR payments. He urged House Speaker Paul Ryan, House Minority
Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell,
and Senate Minority Leader Chuck Schumer to fund the CSR payments
for the next two years.
“If the CSR is not funded, we will have no choice but to
send a notice of default informing the government that we are
dropping our contracts for their failure to pay premiums and seek
to withdraw from the Marketplace immediately,” Molina
In the letter, Molina — whose company has turned a profit from
the exchanges — said without the payments, the company would have
to immediately drop up to 700,000 marketplace enrollees if
the payments were ceased and 1 million people would lose their
coverage in 2018.
Major lobbying groups have also pleaded with the
administration and congressional leaders to continue the
Groups including America’s Health Insurance Plans, American
Medical Association, American Hospital Association, Blue Cross
Blue Shield Association, and the US Chamber of Commerce sent a
letter to lawmakers to urge them to continue CSR funding.
“As medical professionals, insurers providing health care
services and coverage to hundreds of millions of Americans, and
business leaders concerned with maintaining a stable health
insurance marketplace for consumers, we believe it is imperative
that the Administration and Congress fund the cost-sharing
reduction program,” the letter read.
The Trump administration told congressional leaders on Wednesday
that it would continue to fund the payments for now, but did not
make a longer-term commitment that many insurers feel they need
to plan for 2018.
Insurers have to submit their plans for 2018 plan year coverage
on the exchanges by late June or drop out of the markets.