President Donald Trump’s recent health care announcement concerning cost-share reduction cuts, plus the recent Alexander-Murray compromise agreement, has created questions surrounding the future of health care insurance.
Local health insurance officials said the changes are a matter of perspective.
When it comes to cost-share reduction cuts, that’s something officials at Blue Cross Blue Shield of Michigan think are critical to protecting affordability and coverage in the marketplace, particularly for low-income people, according to Andrew Hetzel, BCBSM vice president for corporate communications.
“We’re disappointed that the administration decided to discontinue that funding because what it means in the future is higher premiums across the board for people in Michigan who are buying coverage on their own,” Hetzel said.
Trump cut the cost-share reductions after a federal court ruled in 2016 the government “was unlawfully using unappropriated money to fund reimbursements” to health insurance companies, according to a statement from U.S. Department of Health and Human Services. House Republicans sued the previous administration in 2014 after the Obama administration made what they called unauthorized cost-sharing reduction payments.
In 2016, the government paid $166 million to Michigan insurance companies in reimbursements. The national total in 2017 will be $7 billion, according to the nonpartisan Congressional Budget Office.
Hetzel said BCBSM is encouraging Congress to appropriate funds for the reimbursements in a bipartisan fashion.
Because of uncertainty whether the cost-sharing reductions would continue, the Michigan regulator asked health insurance companies to submit two sets of 2018 pricing, one including reductions and one in case they would not continue. With the cuts, premium increases will be 31.7 percent for BCBSM and 22.6 percent for Blue Care network, as opposed to 26.9 percent and 13.8 percent increases, respectively, without the cuts, according to Hetzel.
Marti Lolli, Priority Health chief marketing officer and senior vice president of employer solutions, said the announcement gives consumers the opportunity to assess their needs and decide what works for them.
“We continue to see a lot of individuals interested in narrow network products, which offer really affordable options,” Lolli said.
Once the premiums rise, consumers may be tempted to choose skimpier coverage with a smaller premium, compromising eligibility for cost-share reductions, which may be consequential to some. Hetzel warns that consumers should consider their individual needs, such as health condition and eligibility for subsidies, before making a decision.
“Otherwise, they run the risk of making a bad decision and either providing themselves too little health coverage or too much of a premium,” Hetzel said.
Along with the cost-share reduction cuts announcement was information that small employers could ban together to form associations that can negotiate benefits, possibly over state lines.
Hetzel said it remains to be seen whether forming associations works in the practical marketplace.
For instance, an employer with younger, healthier employees may not benefit from grouping with a company that may have unhealthier employees.
“We feel in Michigan that the small employer market is working well right now,” he said, noting that in two of the past three pricing cycles, BCBS has reduced its rates, on average, in the small employer markets, while small employers have not dropped their employees as was predicted when the Affordable Care Act began.
“So, we’re not quite sure why association health plans would be needed in Michigan given the strength of the market today,” he said.
As far as insurance companies selling across state lines, Hetzel said the idea is “faulty in practice” because companies in one state would have to adjust their procedures in other states to comply with their market and regulations.
“We’re not entirely sure whether or not that would make coverage more affordable or less affordable given the amount of cost associated with complying with multiple stage regulatory systems,” he said.
The announcement also indicated an expansion of coverage of low-cost, short-term, limited-duration insurance, often utilized by people between jobs, those in counties with a single insurer offering exchange plans, people with limited coverage networks and people who missed open enrollment but still want insurance, according to the White House statement.
Lolli said the impacts of the short-term, limited-duration insurance expansion are unclear for now.
“There’s still a lot of regulation that needs to be written to execute the decision, and we’d need to review it to fully understand the impact to the market,” she said.
Five days after Trump’s announcement, Sens. Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington) announced their compromise agreement, which would continue the reimbursements for two years and allow for more flexibility in designing health plans, Hetzel said. He said the Alexander-Murray agreement also provides additional funding to inform consumers of their options during open enrollment season.
“The Alexander-Murray proposal is something that we’ve wanted to see for a long time,” Hetzel said. “It’s a legitimate, responsible effort by legislators from both parties to work on proposals to strengthen and stabilize the individual insurance market across the country.”
President Trump and House Speaker Paul Ryan (R-Wisconsin) do not support the bill, as of Oct. 18. But the bill still has to go through Congress, and Alexander said, “By the end of the year, chances are very good this agreement or, something like it, is law.”
Whether the proposal is effective remains to be seen, but Hetzel said he is encouraged by the discussion.
“Overall, we’re very enthusiastic about the bipartisan work that seems to be going on in the Congress.”