President Donald Trump’s decision to stop paying cost-sharing reduction subsidies to health insurers participating in the Affordable Care Act’s individual markets added a late element of chaos as the open enrollment period is set to open next month.
Maryland’s health insurers on the individual exchanges must re-evaluate their offerings for 2018 and beyond and both insurers and the state said they were considering legal options.
At CareFirst BlueCross Blue Shield, the dominant insurer in the individual market in Maryland, CEO Chet Burrell said the loss of subsidies could completely undermine the Affordable Care Act markets.
“It was actually actively sabotaged,” Burrell said about the health care law. “What we think (the Trump administration’s actions) will do is completely undermine the market over the next several years and hurt the most vulnerable part of the population that Obamacare was intended to reach and I think was in fact reached in Maryland.”
CareFirst will seek to amend its rate request for 2018 to raise premiums an additional 20 percent. It already has received approval from state regulators for an average rate increase of 34.5 percent for its HMO plans and 50 percent for its PPO plans.
These additional rate increases would only apply to consumers receiving subsidies on a silver-level plan. Overall, CareFirst estimated that would affect about one-fifth of the company’s more than 175,000 individual market members.
Burrell said he expected a decision from the Maryland Insurance Administration about whether the insurer would be allowed to amend its filing by early next week. The administration declined to comment.
Maryland Attorney General Brian E. Frosh Friday joined a coalition of 17 states and the District of Columbia in filing a lawsuit in the Northern District of California against the Trump administration’s decision to stop the subsidy payments.
For now, Maryland consumers would be unlikely to be directly affected by the premium increases. If they were eligible for subsidies, they also fall into an income bracket where they are eligible for premium tax credits. As the premiums rise to cover the loss of subsidies paid to the insurers, the tax credits available to consumers would also rise.
For that reason, the Kaiser Family Foundation and the Congressional Budget Office have both estimated that the federal government could lose billions of dollars by not paying the subsidies.
The Trump administration said it came to the conclusion that the subsidy payments were not allowed by law because they had not been appropriated by Congress.
“After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution,” said Eric Hargan, acting secretary of the Department of Health and Human Services, and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, in a statement. “Congress has not appropriated money for (subsidies), and we will discontinue these payments immediately.
The House of Representatives had sued over the subsidy payments, calling them unconstitutional. A federal court ruled last year that the payments were unlawful and this year, the Trump Administration dropped an appeal of that decision started by former President Barack Obama’s administration.
But when the federal government dropped the appeal, attorneys general for 17 states and the District of Columbia sued to intervene.
Now, Maryland could sue over the subsidies, said Attorney General Brian Frosh.
“Trump threatens the health of more than 400k Marylanders,” he wrote on Twitter. “We will sue to protect them.”
Burrell said CareFirst would also be pursuing legal action, though he did not know what form that action would take.
“Whether or not another class forms, we are certainly of the view that this as an act on the part of the government that fails to fulfill its promises,” he said.
CareFirst stands to lose about $50 million on the 2018 market without the subsidies he said. For each of the remaining three months of 2017, the company expects to lose about $3.5 million.
Burrell said that if action is not taken on the subsidies, CareFirst could explore leaving the market, but it would only be able to do so for its more popular HMO offerings. State law prevents the company from pulling its PPO offering out of the market.
“If this were unsatisfactorily resolved,” he said. “I think we’d have to look very seriously at all of the actions we could take.”