The state’s largest insurer offering Affordable Care Act plans to ask for premium increases that are 14.2% higher on average than last year’s rates after President Trump announced certain subsidies will end.
Arkansas Blue Cross Blue Shield had originally asked for a 7.8% increase, but that factored in “cost-sharing reduction” payments that offset the costs of insuring low-income customers.
The Affordable Care Act is all about the government helping people get health insurance - even if they wouldn't otherwise have the money to buy it.
In the four years since it took effect, insurance companies have had to adjust year-to-year. Along the way, the federal government helped those companies offset certain costs.
But Congress never laid out the money to pay those costs when it approved what is often referred to as Obamacare. Republicans sued the Obama Administration when it continued to pay the subsidies, and a federal judge ruled them illegal. President Trump signaled his intention to stop the payments, but held off as Congress debated health care reforms this summer. Now that those efforts have failed, the president officially shut off the funds.
“Basically it cuts off payments to the insurers who were being compensated for providing lower deductibles and copays for particular classes of customers,” said Michael Pakko, state economic forecaster for the Arkansas Economic Development Institute at UA-Little Rock.
Insurance companies and states have been preparing for the subsidies to go away, including requests for plans with CSR included and without the money available.
In the wake of Thursday’s White House announcement, the federal government told them, they could submit those higher premium plans even though deadlines had already passed. They now have until Oct. 17 to submit new plans.
It likely means a family of four covered by insurance purchased on the ACA website with income between $33,000 and $61,000, premiums are likely going up.
There is a slight silver lining.
“It's likely to be offset in higher premiums, which would then be offset for the lower income customers who receive tax credits on their federal taxes,” Pakko said.
A spokesperson for Republican Gov. Asa Hutchinson said it was too early to determine how the ending of subsidies would affect other parts of the complicated health insurance marketplace, including the state’s unique Medicaid expansion. Arkansas Works uses federal Medicaid funds to purchase insurance on the exchange.
“My staff and I are working closely with [other departments] and the carriers to minimize the impact of this change on private insurance consumers and Arkansas Works enrollees,” the Governor said in a statement. “We will make all the necessary adjustments in advance of the upcoming Open Enrollment period."
That enrollment period begins Nov. 1.
If they follow Blue Cross, the two other carriers, Ambetter and QualChoice will also see premium spikes.
Ambetter will go up by 21.4% over last year. QualChoice projects average premiums will be nearly 25 percent above 2017.