Topeka President Donald Trump's decision to halt payments of cost sharing subsidies for certain kinds of insurance policies purchased on the Obamacare exchange markets will have little impact in Kansas, one insurance company said Friday.
That's because when insurance companies who participate in the exchange markets set their premiums for next year, they were allowed to build into their rate structure the likelihood that those cost sharing reductions, or CSR's, would soon end.
"The insurance commissioner (Ken Selzer) allowed us to bring forward rates that would reflect a world without the funding for CSR's," said Mary Beth Chambers, spokeswoman for Blue Cross Blue Shield of Kansas, the largest insurer on the exchange market that serves the 103 counties outside of Johnson and Wyandotte counties.
That will come as good news to the more than 48,000 Kansans who bought insurance on the exchange market in 2017 and qualified for the cost sharing subsidies. Open enrollment for 2018 begins Nov. 1 and runs through Dec. 15.
The CSR's were a form of subsidy intended to lower the cost of health care for people who buy policies on the exchange markets with incomes below 250 percent of the federal poverty level. That's $30,150 a year for an individual, or $51,050 for a family of three.
Those subsidies, which apply to "silver" plans, lower the amount those people have to pay in deductibles, copayments and coinsurance, according to the U.S. Department of Health and Human Services.
For 2018, the cost of those policies increased significantly, but most individuals will not feel that increase because they receive advance tax credits to ensure they only spend a certain percentage of their income on premiums.
The CSR's were a different kind of subsidy. Under that program, when qualifying individuals incurred a health care expense, the insurance company would pay all or most of the cost of the deductible and copays, and the federal government would then reimburse the insurance company.
Chambers said the biggest impact in Kansas of Trump's executive order will be on insurance companies' financial bottom line for the remainder of this year because now they won't receive millions of dollars of reimbursements they had been counting on.
"They are stopping payments immediately," Chambers said. "We were to get a payment in October and we will not get that payment, based on what we're hearing out of Washington. So there will be some money lost between now and the end of 2017. For 2018, everything should be good, at least everybody in Kansas. And then we're hoping that Congress will do some work looking ahead to 2019 that will continue to help bring stability to the individual marketplace.
In a separate phone interview, Selzer said most state insurance regulators made similar arrangements. But in those states that didn't, Trump's order threatens to destabilize the market for individual health coverage.
"I think it does in those states that weren't planning ahead like we were and most other states were," Selzer said. "Certainly for the rest of this year, the lack of CSR payments will hurt severely those carriers that are on the exchange now, including in Kansas, but all of our companies have committed to serving in Kansas in 2018, and there is no further change in rate that will be permitted for any of them."
In Kansas, people in all 105 counties can choose policies from among two companies. In the 103 counties outside Johnson and Wyandotte counties, they are Blue Cross Blue Shield of Kansas and Medica Insurance Company. In Johnson and Wyandotte counties, they are Medica and Blue Cross Blue Shield of Kansas City.
According to data from the Kaiser Family Foundation, 86,310 individuals in Kansas bought policies on the federal exchange market in 2017. Of those, 74,531, or 86 percent, qualified for advance tax credits to lower the cost of their premiums. Also, 48,493 individuals, or 56 percent of all marketplace enrollees in Kansas, qualified for the cost sharing reductions.
Trump has referred to those payments as a "bailout" of the insurance industry, a term that officials at Blue Cross Blue Shield of Kansas strongly reject.