Insurers OK'd to submit multiple rates in Arkansas

State agency’s offer to provide hedge against cut in U.S. cost-reduction subsidy

To hedge against a possible reduction in federal subsidies, the three companies offering plans on Arkansas' health insurance exchange will be able to submit multiple sets of rates for 2018 to the Arkansas Insurance Department, the state insurance commissioner said in a bulletin Wednesday.

Commissioner Allen Kerr said he will consider only one set of rates from each company for approval, but the companies can submit other rates "for informational purposes."

Such alternative rates can take the place of the company's initial proposal if the "requirements" for a type of subsidy known as cost-sharing reduction payments changes.

Ruling in a lawsuit filed by Republicans in the House of Representatives, a federal judge has ruled that the cost-sharing reduction payments, which total about $7 billion annually, were never authorized by Congress, but she has allowed the payments to continue while the case is on appeal.

President Donald Trump has said he might stop the payments. His administration hasn't said whether it plans to continue pursuing the appeal.

Insurance Department spokesman Ryan James said Kerr's bulletin is meant to give the companies a chance to change their proposed rates if federal payments stop.

"We wanted to be proactive this far out, in order to let folks know that we understand there's this question out here," James said.

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Arkansas Blue Cross and Blue Shield, Little Rock-based QualChoice and St. Louis-based Centene offer plans on Arkansas' health insurance exchange and have indicated they will continue offering plans next year.

The companies' proposed rates for 2018 are due to the Insurance Department by July 14.

If the cost-sharing reduction payments stop, Kerr's bulletin gives insurance companies a chance to change their rates after they are submitted but before the Insurance Department sends them to the federal Centers for Medicare and Medicaid Services for final approval, likely in late August, James said.

Enrollment through exchanges begins Nov. 1 for coverage starting in 2018.

Created under the 2010 Patient Protection and Affordable Care Act, the cost-sharing reduction payments reimburse insurance companies for reducing deductibles and copayments for low-income consumers who sign up through an exchange.

In Arkansas, 34,679 of the 59,845 people enrolled in non-Medicaid plans on the state's health insurance exchange were in plans for which companies received such payments as of May 15, James said.

The health care law requires insurance companies to offer plans with reduced cost sharing regardless of whether the federal subsidies are provided.

If the payments end, the companies are likely to increase the premiums for their midrange coverage level plans, known as "silver" level plans, to make up for the loss in funding, experts say.

The silver plans are the only ones through which consumers can receive the reduced cost sharing. The plans normally cover 70 percent of a typical consumer's medical costs. For low-income consumers, the plans are modified to cover as much as 94 percent of the costs.

If the cost-sharing subsidies are eliminated, the premiums for silver level plans in the 39 states, including Arkansas, that use the federal healthcare.gov enrollment system will increase 19 percent, the Menlo Park, Calif.-based Kaiser Family Foundation estimated last month.

In Arkansas, the premiums for such plans would increase 15 percent, the foundation estimated.

The impact in Arkansas likely would be even bigger, however, if the state wins federal approval to move about 60,000 Arkansans off its expanded Medicaid program known as Arkansas Works.

That's because the Arkansans losing Medicaid coverage would be eligible to sign up on the exchange for silver-level plans with reduced cost sharing.

Most Arkansas Works enrollees are enrolled in silver-level plans now, but with the state Medicaid program paying the premium as well as the cost-sharing reduction subsidies.

The Medicaid subsidies are not being challenged in the lawsuit. The suit also doesn't challenge federal tax-credit subsidies that reduce premiums for low-income consumers who don't qualify for Medicaid.

The state Department of Human Services hasn't studied the effect that eliminating the federal cost-sharing subsidies would have on the cost of Arkansas Works, department spokesman Brandi Hinkle said.

"We have good relationships with the carriers and think they will work with us to find a solution" if the payments are stopped, Hinkle said in an email.

Metro on 05/25/2017

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