UPDATE: On October 26th, North Dakota’s insurance commissioner announced that Sanford Health Plan will return to ND’s individual exchange for 2018, but only in 5 counties. Sanford’s Executive Vice President, Kirk Zimmer stated that the move was due to the Trump administration’s decision to cut off insurer subsidies.

Though the start of the 2018 Open Enrollment Period (OEP) is only a week away, there is unprecedented uncertainty around the Exchanges and federal funding established by the Patient Protection and Affordable Care Act (ACA). Despite this, three states have decided to hold their ground and block issuers from increasing member premiums for 2018.  

With rumors that the White House was considering ending cost-sharing reduction payments, many health insurance carriers increased their 2018 premium rates to account for the loss of government funding. Since the official decision to end the payments on October 12, even more health plans have raised their rates through an informal offer by the Department of Health and Human Services (HHS), allowing carriers to adjust their premium rates right up until OEP 2018 on November 1st (1).  

While insurers in all 50 states, plus D.C., have requested the approval of rate hikes, the insurance commissioners of Minnesota, North Dakota, and Vermont have unilaterally declared that they will deny any such request by insurers participating in their exchanges. They reason that the effect would be too severe with such little time until OEP 2018 begins on November 1st, justifying that their purpose is to protect consumers though whatever measures they can take. 

In states with their own state-based marketplace (SBM), the governments came up with their own directions for carriers, based on what they believed would happen to CSRs. Colorado and Washington asked carriers to create two different sets of rates: one for the scenarios that CSRs continue and one for the cancelation of CSRs (1). Connecticut asked carriers to set rates with the assumption that CSRs continue, while other states like Maryland told their carriers to set rates assuming CSRs would end. Clearly, these decisions left some states more prepared than others when the President officially announced his decision.  

In Minnesota, the state declared there would be no hike in rates in a joint statement releases by the MN HHS, Department of Commerce, and MNsure (2). It is estimated that over 180,000 Minnesotans will obtain coverage though the public individual market, and MN plans not to discourage any of them from enrolling come November 1st 

The MN Dept. of Commerce Commissioner Mike Rothman has clarified, though, that this is only for 2018, indicating what could happen in 2019 and beyond depends on how destabilized the individual market becomes. For this year, though, MN struck a deal with the federal government for a $542 million state program to help lower premiums before CSRs were cut, which may be the reason that they can “afford” not to raise premiums.  

In North Dakota, Insurance Commissioner Jon Godfread wrote a private letter to ND insurers declaring that health insurance companies would not be able to increase rates for 2018. The letter stated, “…it is my duty to look out for those consumers who have had to absorb multiple rounds of increases to their health insurance premium” (4).  

Blue Cross Blue Shield (BCBS) of ND is the only insurer that has committed to the ND exchange for 2018, and had committed before this announcement. BCBS of ND acknowledged that it would absorb all the losses from ending CSR payments if the commissioner denies rate hikes, but recognized that additional [rate] increases at this point would cause disruption for consumers in North Dakota. Medica had already left the ND exchange before the CSR payments were cut, leaving Sanford Health Plan (Sanford) as the only insurer from ND’s 2017 exchange undecided about 2018. Sanford President Kirk Zimmer said, “There are a lot of ideas being floated that may impact how we move ahead,” but has yet to provide an update into Sanford’s decision since (3). 

Vermont is the most recent state to announce that it will be blocking insurer’s request to raise premium rates. The Green Mountain Care Board (GMCB), Vermont’s health insurance board, understands that insurers will be bearing the burden from CSR payment losses, but believes that 2019 will be the time for appropriate hikes with OEP 2018 beginning in less than two weeks (4).   

BSBS of Vermont and MVP Healthcare, the two insurers committed to Vermont’s 2018 exchange, have put in requests for rate hikes, but GMCB Chairman Kevin Mullin announced, “We have verbally told them that our position is that it will be dealt with in the rate filings for 2019.” The two insurers will have to take large hits to their balance sheet for 2018, and consequently will likely seek massive increases for 2019 to replenish their financial reserves, but Mullin believes that altering the approved 2018 rates less than two weeks before the enrollment period “could do more harm than good.” Thirteen thousand Vermont citizens enrolled in health insurance through Vermont Health Connect in 2017 and additional premium increases could adversely affect 2018 enrollment, so Mullin’s stance will come as a great relief to many (4). 

While the repercussions will be felt in 2019 and beyond, there are consumers who need health insurance but are not prepared for increasing premiums. Blocking the rate hikes by just delaying until 2019 will give members in these states time to preparation for the potential financial hit.  

Sources: 

  1. http://www.healthcarefinancenews.com/news/cms-extends-aca-premium-rate-filing-deadline-due-account-csr-risk-adjustment-methodology
  2. https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2017/10/19/the-health-202-obamacare-s-2018-rates-are-already-baked/59e780a430fb041a74e75dfc/?utm_term=.ee63798e4953 
  3. http://www.startribune.com/trump-s-action-won-t-trigger-premium-hikes-in-minnesota/450786313/
  4. https://www.usnews.com/news/best-states/north-dakota/articles/2017-10-17/insurance-commissioner-to-deny-additional-rate-increases 
  5. http://www.rutlandherald.com/articles/vt-wont-lift-rates-to-cover-lost-subsidies/

The views and opinions expressed by the authors on this blog website and those providing comments are theirs alone, and do not reflect the opinions of Softheon, Inc. or any employee thereof.  

Sean Kirschner

Sean is a Business Analyst at Softheon. His objective is to provide insight into the current state of the healthcare landscape through research on both business and policy. He is also responsible for assisting the research team through creating and maintaining research briefings on various industry topics. He earned his bachelor’s degree in economics from Boston College.