State officials grim about feds’ commitment to insurers

By Ben Lockhart

Deseret News

SALT LAKE CITY - Utah Department of Insurance officials on Thursday painted a grim picture concerning the federal government's willingness to follow through on funding for cost-sharing subsidies, saying the wavering could leave health insurers without any barometer to gauge next year's premiums.

Department officials also said premiums on the federal individual insurance marketplace are expected to rise by 15 to 20 percent next year, though projections are difficult because of the uncertainty surrounding health care reform.

In a presentation to the Utah Legislature's Health Reform Task Force, insurance commissioner Todd Kiser said he is not holding out hope that the Trump administration will give insurers those funds.

"I don't see them funding it, as optimistic as I'd like to be. I've come to the conclusion that it's not going to be funded. ...As we've met (with federal officials) in the past month, in good conscience I can't just assume we're going to get (the funds)," Kiser said.

The cost-sharing subsidy reimburses insurers to make up for the losses they incur by lowering coinsurance rates and deductibles. Last year, the government paid $7 billion in subsidies.

President Donald Trump has previously called those funds "ransom money" in negotiations with Democrats over health care reform. The administration has given mixed signals as to whether it plans to continue with that funding.

"They're not willing to commit to it under the new presidential administration," Tanji Northrup, assistant commissioner of the Utah Department of Insurance, explained to the Deseret News.

Northrup added that a lack of certainty over those funds "really puts the insurers at a risk." Health insurance providers in Utah aren't sure whether they will be required to increase monthly premiums in light of withdrawn subsidies, she said, and very likely won't have any more clarity before they are required to submit their initial rate plans later this month.

"We're going to have insurers who may be financially unstable" if premium rates are not adjusted and the funds don't come, Northrup said. Insurers fear they could also get it wrong by significantly increasing premiums before receiving word that they will, in fact, be reimbursed, and unnecessarily drive up prices for consumers, she explained.

The Utah Insurance Department is recommending that insurers serving Utahns prepare separate rate plan filings in anticipation of both scenarios.

Some insurers might reconsider offering coverage to Utahns through the federal exchange at all, Northrup said, but they are being encouraged to prepare to submit paperwork to participate in the exchange regardless. That's because they can later withdraw their offerings in that marketplace if it's not financially feasible, but can't decide to enter after the application deadline has passed.

The insurance department is also willing to re-review rate plans from insurers in the event that decisions surrounding subsidies change their preferred premium strategy, but the federal government will have to approve the state's review, according to Northrup.

A simple fix would be a strong commitment from the federal government to maintain the status quo, which would prevent insurers from getting cold feet, Northrup said.

"All of this confusion only happens if the feds fail to fund the (cost-sharing reductions), she said. "If they fund (it) then it (would) be business as usual, as we've seen the last few years."

But Northrup, like Kiser, isn't confident that such certainty will come from the federal government, which has sent varying messages over whether insurers will be reimbursed through the end of the year.

"If they fail to even fund the last half of 2017, our insurers are at risk," she warned.

In 2013, 39 health insurers offered Utahns plans on the individual market, Northrup said. That number is expected to be six next year - with just half of those insurers offering plans to Utahns specifically via the federal exchange.

Medicaid concerns

Nathan Checketts, director of Medicaid and Health Financing for the Utah Department of Health, told the task force of the possible effects of capping states' per-enrollee Medicaid funding that could be matched by the federal government if the American Health Care Act were to be passed into law.

The measure, called a per-capita cap, calculates the maximum number of matching federal funding using states' 2016 per-enrollee spending. That mechanism could present problems because it prohibits states with low per-enrollee spending in 2016 "from catching up with other states on reimbursement rates," Checketts said.

The per-capita restriction takes inflation into account, but does not take any account of how much states must pay per enrollee based on landmark but very expensive treatments that could be developed in the coming years.

Another funding mechanism being considered under the Affordable Health Care Act is block grants, which theoretically would give states more autonomy over Medicaid dollars. However, that model would also add uncertainty to some Medicaid recipients' eligibility and benefits, Checketts said.

Block grants pose a similar structural problem by not taking into account population growth when calculating funding levels - which presents a significant problem for fast-growing Utah, he said.

Rep. Dean Sanpei, R-Provo, also expressed concerns that the block grant plan uses the consumer price index to account for inflation, not medical costs-specific inflation, which "in my experience is much higher."

Several organizations also came out to voice their opposition to the American Health Care Act and ask the task force to put pressure on Utah's congressional delegation to oppose it, or least portions of it. Organizations that presented Thursday were the Utah Health Policy Project, Utah Disability Law Center, Voices for Utah's Children and AARP.

The task force's co-chairman, Sen. Allen Christensen, R-Ogden, assured the groups that their concerns were being taken seriously, but also stressed that the American Health Care Act is ultimately out of state lawmakers' hands and is in many ways still a nebulous piece of legislation.

"Until we get our arms around what's really happening, we don't have a lot of say about it," Christensen said.

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Credit: By Ben Lockhart Deseret News