The insurance exchange in Georgia and other states just got an injection of stability. And that’s good news for people buying individual or family coverage for next year.
The Trump administration announced late Tuesday that it’s restoring the Affordable Care Act payments to insurers that it froze earlier this month. Those risk-adjustment payments were worth about $10.4 billion for 2017.
The payments that were frozen are part of an ACA program designed to help balance the insurance markets when some insurers inevitably received sicker, more costly patients.
Insurance industry officials warned after the freeze that companies might feel forced to raise premiums to compensate for the loss of the payments.
Earlier this month, the Georgia insurance department released proposed premiums for the state’s 2019 insurance exchange that reflected a greater stability than in the previous year. The rates — ranging from about 2 percent to almost 15 percent — were modest compared with the 2018 Georgia exchange hikes, which exceeded 50 percent for the four participating health plans.
When it suspended the payments to insurers in early July, the federal Centers for Medicare and Medicaid Services said it was responding to a February ruling by a federal judge in New Mexico.
CMS Administrator Seema Verma said in a statement Tuesday evening that insurers “had expressed concerns about having to withdraw from markets or becoming insolvent should be assured by our actions today [to resume the payments]. Alleviating concerns in the market helps to protect consumer choices.”
The ACA exchanges were designed to provide coverage to people who do not receive job-based or government insurance.
The freeze of payments “seemed a bizarre and fairly flimsy decision,’’ said Bill Custer, health insurance expert at Georgia State University. The risk-adjustment program provided less incentive for insurers to seek out healthier people for coverage, he said Wednesday.
Without the payments, he said, insurance companies would have raised premiums to offset losses.
Consumer advocates who support the ACA and Democrats in Congress had labeled the freeze politically motivated. Some Democrats called it an act of “sabotage” against the health law by the Trump administration.
The payments work without taxpayer subsidies. Insurers with healthier-than-average customers pay into the program, and the money goes to insurers with sicker patients.
Bloomberg News reported that among publicly traded insurers, Centene Corp. (the parent company of Ambetter in Georgia) and Molina Healthcare Inc. owe money to other insurers under the program, while Anthem Inc., the parent company of Blue Cross Blue Shield of Georgia, is set to receive funds.
In February, Judge James Browning of the U.S. District Court in Albuquerque voided the formula used by the federal government to calculate the payments. Ruling in a lawsuit filed by an insurance company, New Mexico Health Connections, the judge found the formula to be flawed because federal officials “assumed erroneously” that collections and payments had to offset each other, the New York Times reported.
The administration did not change the formula to address the concerns of the judge or the plaintiff in the suit. So it’s unclear whether they will be satisfied with the administration’s move, the Times reported.
Families USA, a Washington-based consumer advocacy organization, praised the administration’s move Wednesday.
“The risk adjustment program prevents health insurance plans that happen to get a larger share of high-cost enrollees than other plans from being at a financial disadvantage,” said the group’s executive director, Frederick Isasi, in a statement. “Without risk adjustment in place, plans will have a strong financial incentive to cherry-pick patients who cost less to insure and put up as many barriers as possible for people with pre-existing conditions and others with high health care costs.”
The increased stability for the 2019 Georgia market was reflected by the proposed expansion of Ambetter and of Blue Cross and Blue Shield of Georgia into more counties in the exchange. All 159 counties will have an exchange health plan to choose under the proposed filings, state insurance officials said Monday.
But there are still factors that add significant uncertainty to the ACA.
Earlier this month, the White House announced it was again slashing funds for the “navigators’’ who help enroll people in the ACA exchanges. The cuts will almost certainly reduce the in-person assistance provided to Georgians seeking an exchange health plan for next year.
Macon-based Community Health Works, which oversees a navigator program in the state, said Wednesday that the federal navigator funding for the upcoming year’s enrollment for Georgia will be $500,000 – about one-third of the 2018 exchange total.
Another factor in this uncertainty is the official end next year of the ACA’s requirement that people have health insurance. The requirement was meant to keep as many Americans as possible in the pool of insured people, and without it more consumers may skip buying coverage in an attempt to save money.
In addition, Georgia and 19 other states are challenging the ACA in court. The administration has asked the courts to strike down key elements of the law, including the current protections for consumers with pre-existing medical conditions
Andy Miller is editor and CEO of Georgia Health News