2017 has been a whirlwind year for health care reform. As rate filing season draws near, there is still considerable uncertainty surrounding the future of the ACA and what lies ahead for health care reform. Here’s a summary of where things stand in Colorado:
Failed: Bill to extend premium help to people above 400 percent of the poverty level
Colorado H.B.1235 would have created a state-based premium relief program for people in Colorado’s three highest-cost rating areas (essentially all of the state other than the front range), who earn between 400 percent and 500 percent of the poverty level and spent more than 15 percent of their income on health insurance purchased through Connect for Health Colorado.
The money would have been used to offset premiums in the East, West, and Grand Junction rating areas, where the subsidy cliff is most pronounced. These areas encompass the majority of the state’s counties, but a minority of the population, as they are mostly rural counties.
The bill passed the House in mid-April, but did not make it out of committee in the senate. As a result, there is no forthcoming state-sponsored premium assistance for people with income that’s a little too high for ACA premium subsidies. Minnesota did enact a similar measure earlier this year, but no other states have been able to establish measures to directly offset premiums with state funds.
Due to the tight timeframe involved in H.B.1235, Connect for Health Colorado had to start implementing systems to administer the premium relief when the bill was still making its way through the legislative process. The bill was introduced in March 2017, and if enacted, it would have called for a special enrollment period beginning June 1, 2017. But the exchange set up their technology contracts in such a way that they could either be terminated or unused funds could be converted to other projects.
Rate filings for 2018: Due by mid-June, available to the public in mid-July
Insurers in Colorado have to submit rates for 2018 to the Division of Insurance by June 15. This is a one-month extension that the Division of Insurance granted in light of the considerable uncertainty that insurers are facing with regards to market stability heading into 2018. The state has said that the filings will not be available to the public until July 14.
A significant factor in the uncertainty is ongoing funding for the ACA’s cost-sharing subsidies. In a nutshell, the ACA requires insurers to provide more robust coverage (with lower out-of-pocket costs) to lower-income enrollees who pick silver plans. And the law requires the federal government to reimburse insurers for the cost of doing so. But the money to do that was never actually appropriated by Congress. As a result, House Republicans (including Tom Price, current HHS Secretary, who was then a Representative from Georgia) filed a lawsuit against the Obama Administration over the legality of funding for cost-sharing subsidies. Nicholas Bagley, University of Michigan Law School professor, explains that the lawsuit does have merit, although it was not the intent of Congress to require funding that wasn’t appropriated.
In 2016, a district court judge ruled in favor of the House GOP, calling the ongoing funding of cost-sharing subsidies illegal. But the ruling was stayed so that the Obama Administration could appeal, which they did. Cost-sharing subsidies have continued to flow to insurers in the interim, and the court case has been pended now that the suit is House GOP versus the Trump Administration (it’s now House v. Price, rather than House v. Burwell). A status update is due in court May 22.
The Trump Administration has gone back and forth on the funding, saying in turns that they will continue to fund cost-sharing subsidies and then stating that they might not (for now, they are paying for May, but no word on June or beyond). Colorado’s Insurance Commissioner, Marguerite Salazar, sent a letter to Colorado’s Congressional delegation in April 2017, requesting that Congress take immediate action to stabilize the individual insurance market. Salazar notes the urgent need for ongoing funding of the cost-sharing subsidies, explaining that if the money is cut off, Colorado’s individual market premiums will rise by 12 to 19 percent for 2018, in addition to other factors that drive rate increases.
Colorado insurers don’t have a contract exit clause if cost-sharing subsidy funding is eliminated
Insurers that sell plans in the federally-facilitated marketplace (HealthCare.gov) have a contract exit clause for 2017 that allows them to exit the exchange mid-year if cost-sharing subsidy funding is cut off. This clause was added to the contract in late 2016, when it became apparent that the issue could realistically become a significant issue in 2017 — and it has.
Connect for Health Colorado confirmed, however, that Colorado insurers do not have a similar exit clause in their contracts with the exchange. That means that insurers would not be able to pull out of the exchange and cancel policies mid-year if the Trump Administration decides to stop paying cost-sharing subsidies. But they would be able to charge much higher premiums for 2018, or leave the exchange at the end of 2017.
Will Anthem offer plans in 2018?
Although Colorado has more insurers in its exchange than most states, participation is localized and urban areas tend to have far more insurer options than rural areas. There are 14 counties in Western Colorado where Anthem is the only insurer offering plans in the exchange, so their continued participation is of utmost importance in those counties.
In late March, Anthem indicated that they were likely to scale back their exchange participation in 2018, which caused a great deal of concern in states like Colorado where areas of the state have Anthem as their only option. By late April, it appeared likely that Anthem would continue to participate in the exchanges in the states where it currently offers coverage, but only if ongoing cost-sharing subsidy funding is ensured. If the cost-sharing subsidy issue isn’t resolved by early June, Anthem will begin to make plans for either sharply higher premiums or market exits for 2018. In Kentucky and Virginia, both of which have early form filing deadlines, Anthem has indicated that they will participate in the exchanges, although that could certainly change if cost-sharing subsidy funding is eliminated.
Kaiser Permanente has said that they plan to remain in the Colorado exchange in 2018.
Will the exchange be eliminated?
Colorado S.B.3, introduced in January 2017, calls for the elimination of Connect for Health Colorado. Colorado would then switch to using HealthCare.gov instead of the state-run enrollment platform. All of the state’s current functions and autonomy (including, for example, the aforementioned contract differences between Connect for Health Colorado and HealthCare.gov) would be carried out by the federal government instead.
The Senate Finance Committee passed S.B.3 in February, and referred the measure to the Appropriations Committee, which amended it and sent it to the committee of the whole in April. But S.B.3 has not yet advanced further in the Senate, and Colorado’s legislative session adjourns on May 10.