AHCA’s Patient and Stability Fund would benefit large states, study finds

Large states and states with fewer insurers offering coverage in the individual and small group markets could receive the most money under the American Health Care Act’s (AHCA) Patient and State Stability Fund, according to a study by Avalere. The AHCA, which consists of two bills that came out of the House Ways and Means and Energy and Commerce Committees, is touted as an effort to repeal and replace the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

Bill

Section 132 of the Ways and Means bill would add title XXII to the Social Security Act to create the Patient and State Stability Fund. The Fund would provide funding for the states and District of Columbia from 2018 through 2026 for eligible states to do any of the following:

  • provide financial assistance to high-risk individuals who do not have employer health insurance to enroll in health insurance coverage in the state’s individual market;
  • provide incentives for entities to enter into agreements with the state to help stabilize health insurance premiums in the health insurance market;
  • reduce the cost for providing coverage in the individual and small group markets;
  • promote participation in the individual and small group markets and increase available insurance options;
  • promote access to preventive services, dental care, and certain services for individuals with mental or substance abuse disorders;
  • provide payments to providers for the provision of health care services as specified by the Administrator; and
  • provide assistance to reduce out-of-pocket costs for individuals enrolled in health insurance coverage in the state.

Funding

The bill would appropriate $100 billion over 10 years to provide allocations to states. According to Avalere, the first 85 percent of the funds would be distributed based on the share of the state’s insurance claims as a percentage of the nation, so states that have more people with insurance and higher medical costs could receive more funding that states lower overall enrollment and spending.

The remaining 15 percent would be distributed to states that have seen an increase in the number of low-income uninsured from 2013 to 2015 or have fewer than three insurers offering coverage in their exchange in 2017.

Distribution among states

According to Avalere, the allocation methodology could result in states like California, Florida, and New York receiving the most money North Carolina, Arizona, Alabama, Oklahoma, and South Carolina could receive disproportionately high amounts of money due to the lack of health insurance participation on their markets in 2017.

The funding levels “vary widely” on a per capita basis compared to the state’s individual market enrollment in 2015, Avalere concluded. They range from $1,830 in the District of Columbia to $220 in Montana.

Highlight on Delaware: ACA rates increasing for Delawareans

Monthly premiums will increase 18 to 35 percent for Delawareans who purchase individual and small group health insurance on the health insurance marketplace in 2017. However the increase faced by individuals will depend on their plan and, in cases of individuals eligible for federal subsidies, the impact of the premium hike is limited because tax credits will increase as premiums rise.

Insurers

Highmark Blue Cross Blue Shield of Delaware and Aetna Life Insurance Co. are the only two companies that will offer individual or small group plans to Delawareans on the marketplace in 2017. When requesting rate increases, Highmark asked for a 32.5 percent increase in individual plan rates—a demand 4 percent higher than the year before.  Aetna sought increases between 23.9 and 25 percent for individual plans. Although Delaware Department of Insurance Commissioner Karen Weldin Stewart negotiated lower rates with the insurers, CMS encouraged Stewart to accept the rate increases so that the insurers would not leave the marketplace. Aetna has pulled ACA plans from 11 other states. The acceptance of the higher rates was a calculated compromise to maintain exchange options for Delaware consumers. Even with the compromise, across the state, plan choices are limited. Between the two companies, there are 20 individual plans and 11 plans for small businesses in 2017.

Premium increases

The premium increases for individual plans vary from 18 to 35 percent. As an example of the cost increases, a 21-year-old nonsmoker could experience about a $64 increase. In other cases, the increases are more severe, for example, smokers over the age of 60 could pay over $300 more than they did in 2016. Consumers can compare rates at the Delaware Department of Insurance website. In the case of enrollees earning between 100 and 400 percent of the federal poverty level (FPL), tax credits are available to make the cost of insurance premiums more affordable.

Perspective

Despite concerns over the rate increases, HHS press secretary Jonathan Gold assured Delawareans that affordable plans will continue to be available, noting that many individuals will be able to select a plan that costs less than $75 per month.  Gold cautioned that “headline rate changes” can be misleading because “tax credits reduce the cost of coverage below the sticker price and shopping helps consumers find the best deal.”

Highlight on Idaho: Premiums are higher, but state retains five insurers on exchange

Health insurance rates are increasing by 24 percent in Idaho for 2017, according to the state’s Department of Insurance (DOI). The increases affect both individual and small group health plans and follows the trends seen across the country.

Rising premiums

On Idaho’s health insurance exchange, where 95,000 state residents are enrolled and 90 percent are eligible for a premium tax credit under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), consumers may chose form five carriers and 196 medical plans, depending on the part of the state. The DOI reported increases in all plans. Weston Trexler, DOI product review bureau chief, told KTVB that the growing premiums are driven by claims.

“Anytime that an insurance company is paying out more claims than premium collected, they’re operating at a loss,” Trexler said. “Claims in this new marketplace have been higher than the carriers originally expected.” Trexler also noted that costs for services and rugs go up every year, and health insurance premiums must change to account for the increase.

Rate review

The DOI stated that carriers filed initial requests for rate review in May but were allowed to submit revised requests based on federal risk adjustment payment requirements released in July. From there, the DOI took public comment and determined whether the requested rate increases were reasonable based on claims experience, premiums, network provider agreements, administrative, and other costs. Most carriers agreed to reduce their revised requests after they had been reviewed, and the DOI could not find the rate increases unreasonable.

“While other states have seen dramatic reduction in carriers participating on their health insurance exchanges, the good news for Idaho is that we continue to have robust choice with five carriers and 186 medical plans in Idaho with at least four companies in every county,” said DOI Director Dean Cameron. “More choice leads to more competition, which should lead to lower premiums.