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Health insurers respond to Trump threat on pricing

April 18, 2017

President Donald Trump is trying to bring the Democrats to their knees with respect to the Affordable Care Act by suggesting that his government would not reimburse the companies for their coverage of low-income individuals.

Meanwhile, a representative body of the health insurers has sent a letter both to Congress and the president to ensure cost-sharing reductions, or CSRs, are refunded.

Trump, however, has a different objective. “I don’t want people to get hurt,” Trump said in an interview to the Wall Street Journal on April 12. “What I think should happen — and will happen — is the Democrats will start calling me and negotiating.”

The president apparently doesn’t want himself to be held responsible for any problems with Obamacare.

It should be noted that the Republicans had been at loggerheads with former President Barack Obama, questioning the legality of the payments without Congressional approval.

What This Reimbursement Is All About?

CSR, according to a healthcare.gov glossary, is a discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. If a person qualifies for the CSR, his out-of-pocket expense or the amount he has to pay for covered medical services per year will reduce.

To qualify for the CSR:

  • One has to shop on the Health Insurance Marketplace, which is a state’s price comparison website for subsidized health insurance.
  • Make between 100 and 250 percent of federal poverty line, or FPL.
  • Obtain a Silver plan.

A standard Silver plan offered by an insurer has an actuarial value of 70 percent. Actuarial value is a measure of the percentage of expected healthcare costs a specific health plan will cover for the standard population.

Insurers in the marker places are required to provide variations of this standard plan depending on the income levels of the beneficiaries. For example, an actuarial value of 73 percent for people with incomes between 200 and 250 percent of FPL, 87 percent for people with incomes between 150 and 250 percent of FPL, 94 percent for those earning between 100 and 150 percent of FPL.

The health insurers who facilitate CSR are reimbursed by the federal government, with the reimbursement done over the course of a year.

Pleading Their Cause

Major healthcare groups, led by America’s Health Insurance Plans, sent a letter to leaders of the House of Representatives as well as the Senate and a separate one to the president himself, requesting that the individual health insurance market be stabilized, as the window is closing to price individual insurance products for 2018. This association has among its members companies such as CIGNA Corporation CI, Humana Inc HUM and Anthem Inc ANTM.

“The most critical action to help stabilize the individual market for 2017 and 2018 is to remove uncertainty about continued funding for cost sharing reductions (CSR),” the letter said.

The number of individuals who benefit from the CSR is 7 million, or about 60 percent of all individuals who purchase coverage through the marketplace.

Among the pitfalls of the withholding highlighted were:

  • Consumer choice will be limited, as insures pull from the marketplace.
  • Premiums for 2018 and beyond will skyrocket, with a 15 percent spike on and off the exchange premiums for all consumers estimated on the loss of CSR funding.
  • More uninsured would mean higher costs for all stakeholders, including employers who sponsor group health plans for employees.

“We urge Congress and the Administration to take quick action to ensure CSRs are funded. We are committed to working with you to deliver the short-term stability we all want and the affordable coverage and high-quality care that every American deserves. But time is short and action is needed. By working together, we can create effective, market-based solutions that best serve the American people,” the letter concluded.

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