- In a decision that could ultimately result in billions of dollars in subsidies for insurers, the U.S. Court of Federal Claims gave the OK last week for a class action suit involving Common Ground Healthcare Cooperative. The suit seeks the cost-sharing reduction (CSR) payments that the Trump administration stopped paying in October.
- In the 18-page opinion and order, the court said Common Ground, a Brookfield, WI-based nonprofit payer that offers coverage to small businesses, nonprofits, individuals and families, “satisfied all of the requirements” to maintain a class action suit. The Department of Justice may appeal the ruling.
- The decision to stop CSR payments had an effect on marketplace enrollment in 2018, according to a new report from the Robert Wood Johnson Foundation. The share of enrollees in bronze tier plans increased from 23% to 29%, as customers found those plans gave them a better deal.
The ACA provided CSR payments to insurers to cover Americans with household incomes between 100% and 250% of the poverty line. The payments were supposed to keep down out-of-pocket costs for lower-income Americans.
However, Trump ended the CSR payments last October with the administration arguing Congress is responsible for them. Efforts on Capitol Hill to grant those payments have since faltered.
Without those CSR payments, insurance companies in the ACA exchanges charged higher premiums for 2018. Middle class and upper middle class members in ACA plans saw their insurance premiums rise this year.
However, stopping CSR payments actually resulted in lower healthcare costs for the poorest people in the ACA marketplace. An ACA provision kicked in that provides premium-reducing subsidies if the premiums increased too much for lower-income members.
Another piece in the CSR discussion is the payer practice of “silver loading,” in which ACA insurers put all the losses associated with no CSR payments onto their silver plans. CSR discounts were only offered for silver plans and they make up more than half of ACA plans. CMS Administrator Seema Verma recently declined to say whether the administration will limit payers’ use of government subsidies, and a Robert Wood Johnson Foundation paper predicted “silver loading is likely to continue next year and will probably expand to more states.”
As the deadline for payers to set 2019 rates narrows, insurers are threatening even higher premiums without CSRs and other market stabilization efforts, such as a reinsurance program.
Alliance of Community Health Plans CEO Ceci Connolly recently told Healthcare Dive, “Losing the individual mandate, losing the cost-sharing reduction subsidies and losing any hint of reinsurance, not to mention the risk corridors that were already gone, you’re just running out of options to manage the cost of this program.”
In a recent report, the Center on Budget and Policy Priorities warned higher premiums may cause healthy members in ACA plans to flee the market and either drop health coverage or choose a low-cost plan, such as a short-term catastrophic plan.