DENVER – Health insurance premiums being offered by insurers in Colorado in 2018 will go up by an additional average of 6 percent – beyond the increases already in place – because of President Trump’s decision to stop making cost-sharing reduction subsidy payments.
The state’s insurance commissioner, Marguerite Salazar, made the announcement Friday afternoon, and like Gov. John Hickenlooper, called Trump’s decision “cruel and irresponsible.”
And though Salazar was noticeably unhappy with the president’s decision, she said the state had prepared for such an event.
She and the Division of Insurance have for months prepared for the end of the subsidy payments to insurers, which help low-income people who make too much to receive Medicaid but often can’t afford out-of-pocket costs.
How do CSR payments work; what do they cost?
The CSR payments to insurers apply only to the individual market, which covers approximately 8 percent of Coloradans, and help those people buy outside insurance in that market.
They are not the same as the subsidy money the federal government uses to lower premiums on Affordable Care Act plans, which help lower premium costs for a similar group of people.
Cost-sharing reductions give people lower out-of-pocket maximum costs on Silver plans, and allows insurers to cover your out-of-pocket costs after they reach their maximum.
Some insurance companies have balked at the payments, as larger companies often have to foot larger costs and don’t receive as much percentage-wise in return.
The insurers will still have to cover the costs of the cost-sharing reductions, however, and are expected to raise premiums in order to recoup the money they aren’t receiving from the government.
However, some may receive additional premium tax credits even with higher premiums, which could offset the premium hikes for some people, according to the Congressional Budget Office.
But the Silver plans could also become obsolete as people buy other plans without the increased premium, CBO said. It estimated that nationally, 1 million people would lose insurance in both of the next two years if the subsidy payments ended.
The House of Representatives’ Republican arm sued over the Obama administration’s subsidies, arguing that Congress hadn’t authorized the federal spending that increases the deficit.
A judge ruled in favor of Republicans last year, but Obama administration attorneys appealed, keeping the payments in place for the first 9 months of the Trump administration.
But the only thing keeping the appeal alive was the Trump administration’s continuing the appeal. So when it dropped the appeal, the judge’s order essentially stood as saying Congress needs to approve the payments.
The CBO estimated the government would spend $7 billion this year, $10 billion next year and $16 billion by 2027 on the subsidy payments to insurers to cover the CSR costs.
The CBO estimated that doing away with the subsidy payments would increase the federal deficit by $194 billion through 2026.
That estimate comes as some Republicans balk over sending relief aid money to disaster-hit areas of the country over concerns it would raise the deficit.
Colorado impact on end of CSR payments
Approximately 45,000 Coloradans receive some sort of cost-sharing reduction benefits, according to the nonpartisan Colorado Health Institute.
The CBO estimates that some of these people will indeed pay higher premiums for at least the next two years, but that the premiums could stabilize afterward.
Some people who still qualify for tax credits under the ACA could see their premiums drop, but those who make too much money to qualify for the credits, but don’t get employer-sponsored coverage, could see their premiums rise by thousands each year—effectively meaning the middle class could be affected the most.
The average premium increase in Colorado on the individual market next year is 26.7 percent, after the Division of Insurance finalized the rates – which assumed CSRs would be funded – last month. Premiums on small group plans will go up by an average of 6.6 percent.
But the Division of Insurance asked insurers to also submit rate requests that assumed CSRs wouldn’t be funded—giving them a safety net in the event Trump decided to stop paying them.
The DOI said Friday it was simply moving on to sending those rates over to the state’s ACA marketplace, Connect for Health Colorado, which will put those rates in its system for open enrollment, which starts Nov. 1.
Connect for Health Colorado said Trump's decision "brings a disruption...on the eve of open enrollment," but said it was ready to help people buy their insurance once enrollment gets underway.
"With the rate increases that we see because of this decision, the assistance available to folks who buy coverage through us goes up," said CEO Kevin Patterson. "I want to further reassure the 45,000 Connect for Health Colorado customers whose co-pays and deductibles are reduced by the cost share reduction program that they will not see their costs go up. THe brunt of the burden of Thursday's action is borne by our health company partners."
Though the division did not release the exact finalized rates for each insurer on Friday, the average 6 percent increase across the board means individual plans will go up by an average of 32.7 percent.
Salazar had consistently this summer chastised Trump and his administration over the uncertainty involving the CSR payments, saying their actions were destabilizing the marketplace.
“We knew this could happen and we were prepared with a contingency plan,” she said Friday. “The Division of Insurance is proceeding to ensure the health of Colorado’s individual market and protect Colorado consumers.”
Her comments came a day after she said that Trump’s Thursday executive order to study a possible move to association health plans and short-term insurance plans could spell an end to employer-provided coverage in Colorado.
She said the DOI is already moving ahead and continuing to focus on open enrollment. But she did continue to plea for Congress to continue to put together the bipartisan health care market stabilization efforts known as the Alexander-Murray hearings in the Senate (which Trump said Friday he opposed.)
Hickenlooper has also been a major proponent of the bipartisan talks and has repeatedly pressed the government to continue the subsidy payments, as have numerous governors from both parties.
He held back little at voicing his displeasure with the administration’s decision Friday.
"Cutting the cost sharing reduction payments is cruel and irresponsible. Beyond the 45,000 Coloradans who rely on this program to make insurance more affordable, hundreds of thousands of Coloradans will see their premiums increase even more,” Hickenlooper said in a statement. “It threatens coverage for Coloradans with chronic diseases or disabilities, potentially putting health care out of reach for those who need it the most.”
He said that Salazar and Lt. Gov. Donna Lynne are working to maintain health insurance access for people in the state, and called on Congress to pass a measure to fund the subsidies as fast as it can – giving a nod to his HELP committee, Alexander-Murray, and Hickenlooper’s efforts as well.
“Congress should immediately fund the cost sharing reductions through at least 2019. The Administration and Congress should work in an open, bipartisan way to stabilize the individual market and make quality health insurance more affordable for all Americans,” Hickenlooper said. “Governors are willing to work with Congress to stabilize our health insurance markets, but to undermine the individual market is cruelty without benefit.”
Rep. Diana DeGette, D-Colo., who is sponsoring legislation that would permanently fund CSRs without using taxpayer money, called Trump’s actions “sabotage.”
“President Trump is trying to achieve via edict what he couldn’t do through legislation: Dismantle the ACA and replace it with a cruel system that punishes the most vulnerable,” she said. “This is Trumpcare by a thousand cuts.”
She, like Hickenlooper, urged a bipartisan solution and for Congress to act "immediately.”
“We must work together in a bipartisan fashion to improve health care coverage in this country, rather than ripping it to bits,” she added.
Sen. Michael Bennet, D-Colo., called Trump's decision "a cruel move that will raise premiums for those who can least afford it," while Sen. Cory Gardner, R-Colo., said he was awaiting additional details from the administration on what their next plans for policy changes will be.
President Trump on Friday called the subsidies “almost a payoff” to insurance companies and said he doesn’t “want to make the insurance companies rich.”
But in a joint statement Friday, America’s Health Insurance Plans and Blue Cross Blue Shield scoffed at the president, saying his decision “will make it harder for patients to access the care they need.”
“Costs will go up and choices will be restricted,” the organizations wrote.
Trump also tweeted a threat of sorts to Democrats, who control zero parts of the legislative and executive branches, to adhere to Republican efforts on any health care fixes: “The Democrats [sic] ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has [sic] stopped. Dems should call me to fix!”
But Senate Minority Leader Chuck Schumer said his party wouldn’t drop everything to work with Trump simply because of “threats and bullying,” and said voters would remember the GOP’s decision and “know full well which party is doing it.”
Attorneys general in at least a dozen states have already said they will sue the Trump administration over the payments, though Colorado is not currently among them.
A spokesman for the Colorado Division of Insurance said the increased insurance premium rates in Colorado for 2018, which were delivered to Connect for Health Colorado Friday to be loaded into its system, could be released next week.