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Three States Bar Issuers from Increasing Rates

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.

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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. 

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Price Factors Heavily in Customers’ Insurance Choice Trends

Yvonne Villante
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Yvonne Villante

Director of Marketing at Softheon
Yvonne Villante is the Director of Marketing at Softheon. Before this, Yvonne held several roles within the organization including Senior Research Manager, Corporate Research Manager, and Marketing Research Analyst. She holds a MBA in healthcare administration from Ohio University and a BS in business management from SUNY Stony Brook. During her undergraduate studies, she graduated within the top 10% of her class.
Yvonne Villante
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According to research, many factors impact insurance choices, including network size and brand, but price is the biggest factor.

Insurers in the market are facing new uncertainties with the current political environment. The fate of the individual mandate, which helps to reduce premiums by compelling healthy people to purchase insurance, and the continuation of cost-sharing reduction (CSR) payments, have been concerning factors in the 2018 rate filings.

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Third Party Premium Provider & Affiliated Organization Payments Raise Concern

Yvonne Villante
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Yvonne Villante

Director of Marketing at Softheon
Yvonne Villante is the Director of Marketing at Softheon. Before this, Yvonne held several roles within the organization including Senior Research Manager, Corporate Research Manager, and Marketing Research Analyst. She holds a MBA in healthcare administration from Ohio University and a BS in business management from SUNY Stony Brook. During her undergraduate studies, she graduated within the top 10% of her class.
Yvonne Villante
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While preventing misuse and inappropriately guiding Medicare and Medicaid consumers to the marketplace continues to be examined by the Centers for Medicare & Medicaid Services (CMS), the results of accepting unauthorized third-party payments can be devastating and disruptive to healthcare payers’ bottom lines and risk pools.

So, why do most health payers accept them?

Third-party payments, initially created by BlueCross in the 1930’s, served as a form of coverage in which the payer (third party) pays a provider (second party) to deliver a service to a patient (first party) [1]. During the Depression Era, concerned hospitals created BlueCross (and later Blue Shield) which was a “prepaid hospital service organization” rather than “insurance.”  Because its priority was hospital finances, it paid hospitals directly for services rather than trusting its customers to pay for the care they received [1].

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