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Cost-Sharing Subsidies Gone For Now; Exchange Premiums Explode

Cost-Sharing Subsidies Gone For Now; Exchange Premiums Explode

In our last blog, we told you that we expected a federal judge to strike down an emergency request made by 18 attorneys general in Democratic states to force President Donald Trump to restore the cost-sharing subsidies (CSRs) in the Exchanges. This week, the judge acted and denied the emergency request. Instead, a decision will be made after a trial.

In general, such emergency requests must meet two standards: (1) that the plaintiff is likely to prevail at trial, and (2) that there is imminent harm if an injunction is not issued. In many ways, all the work states did to mitigate the harmful effects of the President’s actions worked against their request, although proving they were likely to succeed in the case remained tough.

The judge, an Obama appointee no less, indicated that the Trump administration had the stronger legal argument (CSRs have already been ruled unconstitutional by another federal court as they are not appropriated by Congress). Further, the judge noted that most of the states had prepared for the inevitability that Trump would cut the CSRs off by asking plans to submit supplemental filings or rate surcharges that would be triggered if needed.

From a legal standpoint, we generally agree with the judge, whether or not we agree with the President’s actions. It is true that because low-income people are sheltered from massive premium increases through the premium subsidy program, the impact on them is minimal, if any. Plans built costs for the CSR loss into premiums for the Silver plans and most low-income families are paying near or at the maximum allowable under the law now. Some enrollees who are low income may even be better off.

But there are 7 million Americans, largely middle class, who get no subsidy and are even worse off now. These Americans were already reeling from huge increases in the past and struggling to pay full boat. Premiums for 2018 were already rising significantly yet again and the decision to jettison CSRs likely added 20 percent more to the premium increase for Silver plans. In addition, the likelihood that plans will exit in 2018 and beyond increases dramatically.

More evidence that true reform needs to occur in the program emerged this week as well. A study just released by Avalere Health says Silver plans will increase on average 34 percent next year in the federal Exchanges. The study was made possible because the public can now begin looking at options on the Exchanges, with official sign up beginning November 1 through mid December. All metal plans saw major increases, not just the Silver ones impacted by the CSR decision. (Premiums in the other categories jumped 16 to 24 percent.)

Some states saw huge increases, including Florida (49 percent), Missouri (43 percent), Iowa (69 percent) and Wyoming (65 percent). Just three states will see rates drop (Alaska, Arizona and North Dakota – but that is not a sign that the markets are working there).

As an update on the legislative possibility of a stabilization bill passing, it appears that the Senate has a bipartisan group of at least 60 senators to pass the bill in the upper chamber. Senate Majority Leader Mitch McConnell, R-KY, is open to calling a free-standing bill to a vote if the President signals his support and if House Speaker Paul Ryan, R-WI, signals openness to run it in the lower house. The President has gone back and forth on the bill, with the White House recently saying more aggressive language aimed at repeal of key provisions would need to be included. Ryan has said that the bill is not acceptable. That leaves inclusion in an end-of-the-year spending bill (including perhaps covering SCHIP and Medicare reauthorizations), which is by no means out of the question if Democrats and moderate Republicans in each chamber demand the stabilization measures as the price of support for other required measures.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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