Key ACA Insurer Urges Gov’t to Keep Customer Subsidies


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One of the biggest insurers in the Affordable Care Act’s marketplaces is warning the federal government that it must preserve cost-sharing payments for low-income customers to avoid hurting millions of people.

Centene Corp. said Tuesday that a better-than-expected performance in those individual insurance markets prompted it to beat Wall Street expectations in the second quarter and raise its forecast for 2017.

But Chairman and CEO Michael Neidorff, like other insurance executives, is worried about the fate of cost-sharing reduction payments that ease expenses like deductibles for people with low incomes. Money for those payments has made it into Congressional bills that aim to dismantle the Obama-era law, but the fate of that legislation is uncertain.

Republicans have challenged those payments in court, and President Donald Trump has offered no guarantees that they will continue beyond this month.

Neidorff said those payments and some other government support will be crucial to stabilize the exchanges, which have been marred by dwindling choices and soaring prices.

“Any intentional act to stop these … payments does not advance the debate on how to fix our health care delivery system,” he said. “It only hurts the millions of Americans who currently have affordable health care insurance in the marketplace.

“The leadership in Washington bears the responsibility to ensure that is not happening.”

Centene covers more than 1 million people through the law’s state-based health insurance exchanges, which let people shop for coverage and then buy a plan with help from an income-based tax credit. While big national carriers like UnitedHealth and Aetna have retreated from this market, Centene has switched to growth mode.

The St. Louis-based insurer plans to expand next year into exchanges in Nevada, Kansas and Missouri, with growth in its home state filling a void in 25 counties that had no exchange choices for shoppers.

Analysts have said Centene does well on the exchanges because it sticks with customers it knows. The insurer specializes in managing the state and federally funded Medicaid program for the poor. On the exchanges, it markets to low-income customers in areas where it has a Medicaid presence.

“They came at the exchanges from a core Medicaid business and built (care) networks around largely the same providers,” said Jefferies analyst David Windley.

People with low incomes are eligible for large tax credits that help keep their premiums affordable and shield them from big tax hikes. That makes it more likely they keep up with their insurance payments and renew their coverage.

Neidorff didn’t spell out on Tuesday what his company would do if the cost-sharing reduction payments end. But other insurers have said premiums will soar in many markets.

Leerink analyst Ana Gupte said in recent note that she expects more insurers to leave the markets if the future of payments isn’t clarified by September, and that could include Centene reducing its presence. But both she and Neidorff think the funding ultimately will be preserved.

Neidorff said that he thinks congressional leaders won’t have the appetite to leave the “most vulnerable populations” without coverage.

“I am personally, and I think corporately we are, convinced that when all the dust settles there will be subsidies in some form,” he said.

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