Federal Marketplace Cost-Sharing Subsidies in Limbo

It may seem hard to predict what’s going to happen with the health insurance market—particularly if you receive health coverage through the federal health insurance marketplace. With open enrollment around the corner — November 1–December 15, 2017, it is best to be informed about what is possible.

State health insurance regulators and insurance companies have been in much the same boat as consumers, wondering what might occur if Congress acts on health care in any manner.

A facet of the federal health insurance market has been around cost-reduction subsidies, which are payments the federal government makes to insurers to compensate them for providing plans that reduce out-of-pocket costs for low- and middle-income enrollees. Nearly 60 percent of individuals enrolled in health plan in the marketplace benefit from these subsidies.

While the Trump Administration has indicated they may consider stopping these insurer reimbursements, they have continued to make the payments on a month-to-month basis.

Insurers delay decisions on rates

At the same time, states and insurers had a Sept. 30 deadline for setting insurance rates for 2018. Insurers have to estimate their costs in premium increases, and it is difficult to do without assurances regarding the cost-sharing subsidies. Pennsylvanians are not likely to see the rates for 2018 until mid-October, and then they will have to move quickly to make decisions regarding their health coverage.

That is why all eyes have been on Congress to see if they will take action to stabilize the health insurance market or whether states will approve rate increases that address the lack of subsidies. In the latter case, the Congressional Budget Office and industry officials estimate that this would put consumers on the hook for a 20 percent average price hike next year.

Consumer Impact

One thing to keep in mind: Even if insurance companies adjust their rates to make up for losing cost-sharing subsidies, low-income consumers who get subsidies will get a larger subsidy to cover any premium increase, according to the nonpartisan Henry J. Kaiser Family Foundation, which studies health care issues. This would result in more people receiving premium assistance and the average amount of the assistance per person being greater.

Those hardest hit in Pennsylvania would be those who buy individual health care policies without any government assistance. They would bear the full brunt of rate increases.

Consumers would be advised to analyze their household budgets to determine what price increases they might be able to absorb. Officials with the Pennsylvania Insurance Department encourage individuals to learn more about the plans that will be available—the benefits, the out-of-pocket costs, and the provider network—and to do so early enough in the enrollment process so that they can make the best decision for themselves and their family.

Your local hospital is a good resource

Hospitals may have certified application counselors that can help an individual changing health plans or newly enrolling in a plan. The five Pennsylvania health plans serving the marketplace also plan to encourage existing enrollees to shop around for affordable health coverage. Moreover, the Pennsylvania Insurance Department will be providing consumer information to help individuals make informed decisions.

For some individuals who do not have insurance coverage or whose insurance coverage doesn’t fully cover their care needs, it wouldn’t be a bad idea to become familiar with your local hospital’s financial aid program. Typically, this includes adjustments for payment on sliding scale based on their ability to pay.

Above all, as with all health care issues, seek information. Your local hospital or community health center is a good place to start.