Highmark president says subsidy uncertainty helped drive exchange rate increases

CHARLESTON, W.Va. — The president of Highmark West Virginia reported “no good news” ahead of the start of open enrollment on the Affordable Care Act’s health insurance exchange.

That was even before President Donald Trump started taking steps this week to independently rework ACA.

Effectively immediately, the Trump Administration is ending the ACA subsidies, known as cost-sharing reduction payments or CSRs, that are paid to insurance companies to reduce health costs for low-income Americans.

White House officials made that announcement Thursday night after concluding such payments are unlawful without Congressional appropriations.

On Friday morning, President Trump followed up on Twitter.

The move did not come as a surprise to Jim Fawcett, president of Highmark West Virginia, who said the Highmark rate increase of 25.6 percent the Offices of the West Virginia Insurance Commissioner approved this week anticipated the possibility of as much.

“Had there been real confidence around the funding of CSR and a strong individual mandate, we would have been looking at increases that would have been more in line with what we’re seeing in the industry,” Fawcett said Friday

He cited possible rate increases closer to the 14 percent mark.

Work on the new rates started in the spring during what Fawcett called a “tumultuous” year.

Along with the uncertainty about CSR funding and insurance mandates amid the health debate, he said the final numbers were driven by health care trends and high risk numbers.

West Virginia has serious issues on both fronts.

“We were hoping that this would be a year with some more stability because were plateauing,” Fawcett said.

Highmark offers exchange plans in all 55 West Virginia counties and covers about 30,000 of the 37,000 total West Virginians on the exchange who don’t have other insurance options like Medicaid or an employer plan.

Fawcett said 87 percent of Highmark’s exchange customers get a premium subsidy and roughly half of them qualified for the cost sharing reduction, CSR, which supports those between 138 percent and 250 percent of the federal poverty level by bringing down costs.

What the elimination of the CSR funding will mean for those individual West Virginians was not immediately clear.

“If you’re in that ten percent who purchase our products who get absolutely no subsidy, it’s 25.6 percent,” Fawcett explained about the possible cost hikes.

“From there, unfortunately, it’s a little more complicated because, as the premiums increase, so do the subsidies.”

All of those covered will be hit with rate increases in the New Year, he confirmed.

On Thursday, President Trump signed an executive order to begin the process of potentially opening up insurance alternatives through expansions of association health plans and short-term coverage.

The order requests draft regulations from the U.S. Department of Labor, U.S. Department of Treasury and U.S. Department of Health and Human Services.

“I’ve been in the business for nearly 30 years and association health plans were big in the 80s and the 90s and the devil’s always in the details,” Fawcett said during an appearance on Friday’s MetroNews “Talkline.”

“The one thing I remind everyone is all of this is doing nothing about the underlying cost (of health care).”

The only other exchange company in the Mountain State is CareSource which operates in 32 counties.

Open enrollment for 2018 at healthcare.gov begins on Nov. 1.

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