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California Lets Insurers Put ACA Changes in 2018 Rate Filings

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Health insurers in California could file 2018 individual major medical rates that highlight the possible effects of two proposed Affordable Care Act changes on coverage prices.

Dave Jones, the state’s insurance commissioner, has invited insurers to file two sets of individual rates: one that shows the cost of coverage written using the current ACA rules, and one that shows what the rates will be if Congress eliminates the ACA individual health coverage mandate and the ACA cost-sharing reduction subsidy program.

(Related: House Postpones ACA Budget Bill Floor Fight)

The managers of and some other states with state-run public exchange programs and rate review programs have postponed their filing deadlines to give carriers more time to deal with uncertainty over how the market will work next year.

Jones is keeping California’s May 1 deadline for preliminary rate filings in place and giving insurers a chance to reflect the impact of elimination of the ACA cost-sharing reduction subsidy and the ACA coverage requirements on next year’s coverage prices.

“My continued hope is that President Trump stops undermining the ACA and instead enforces and funds it, and that the House leadership stops efforts to pass legislation to repeal or otherwise undermine the ACA,” Jones writes in a public letter to California health insurers about the request for two sets of rates.

“It is with this hope that I ask insurers to file rates that would reflect the president reversing course and enforcing and funding the ACA, which is the law,” Jones writes. “However, the department will accept a separate preliminary rate filing reflecting rates should the president not change his current course.”

What Jones Does

California has a two-track system for regulating health coverage.

The California Department of Managed Health Care oversees commercial managed care plans, including commercial health maintenance organization plans, with about 13 million enrollees, according to the California Health Care Foundation.

(Image: Thinkstock)

(Image: Thinkstock)

The department Jones runs, the California Department of Insurance, regulates traditional health insurance coverage for 1.4 million California residents, according to foundation figures.

The Mandate and the Subsidy

The ACA individual mandate provision, or “shared responsibility” provision, requires many people to have what the government classifies as solid health coverage for most of the year or else pay a penalty. H.R. 1628, the American Health Care Act bill, could eliminate that requirement.

The cost-sharing reduction subsidy program is a system that pays ACA public exchange plans extra cash for covering low-income people. The cash helps the low-income enrollees handle the cost of plan deductibles, coinsurance bills and co-payment bills.

Analysts at Milliman have reported the cost-sharing reduction subsidy program accounted for about 7% of the $206 billion in individual major medical insurance revenue that U.S. insurers generated from 2014 through 2016.

Trump administration officials and members of Congress have been fighting over whether the U.S. Department of Health and Human Services should keep making the payments, for how long, and under what conditions.

The cost-sharing reduction discussion is now part of the debate over efforts to pass the temporary funding measures needed to keep the federal government running while the Trump administration and Congress negotiate a longer-lasting spending agreement.

The Limits on Jones’ Offer

Jones will let an insurer file preliminary 2018 rates that include the effects of elimination of the ACA individual mandate and the ACA cost-sharing reduction subsidy.

Jones is not now letting insurers reflect other types of proposed changes in their rate filings.

In the AHCA bill, for example, Republicans have proposed adding new market stabilization subsidies, replacing the current income-based ACA premium tax credit with an age-based tax credit, and increasing the gap between the rates insurers can charge their oldest enrollees and the rates they charge their youngest adult enrollees. Jones has not offered to let insurers include the effects of those proposed changes in their preliminary rate filings.

— Read House Posts New AHCA Bill Packet, Prepares for Floor Vote (includes link to the packet) on ThinkAdvisor.


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