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Sudden Cost-Sharing Reduction End Could Thump Florida Blue

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If the Trump administration goes through with a decision to end Affordable Care Act cost-sharing reduction subsidy payments today, that could hit Florida Blue and health insurers in Florida especially hard, according to data from Avalere Health.

Analysts at Avalere, a health data and data analysis firm, report that a mid-year end to cost-sharing reduction subsidy payments could cost individual health coverage issuers about $1 billion, and Florida issuers about $200 million.

Florida Blue covers more than half of Florida’s cost-sharing reduction subsidy users, and that means the looming $1 billion subsidy payment cut could cost that company alone about $100 million by the end of the year.

(Related: Trump Praises Deal to Trade Temporary ACA Cash for State Flexibility)

Florida Blue put out a statement saying it remains committed to offering Florida residents access to high-quality, affordable health coverage.

In spite of the possibility that cost-sharing reduction subsidy payments may end in the middle of the year, “we will make no changes to our existing ACA plan through 2017, and we’re going to absorb the financial impact of that decision,” the company says in the statement.

Cost-Sharing Reduction Subsidy

The cost-sharing reduction subsidy helps Affordable Care Act exchange plan users with family income under 250% of the federal poverty level handle health play deductibles, co-payments and coinsurance amounts.

The upper income limit is now about $30,000 for an individual in most parts of the country, and about $61,500 for a family of four.

The federal government pays the subsidy money straight to the coverage issuers, not to the enrollees.

Florida has been the biggest exchange plan market, with about 1.8 million exchange plan enrollees, and about 1.2 million cost-sharing reduction subsidy users.

Units and affiliates of Florida Blue, an arm of Jacksonville, Florida-based Guidewell Mutual Holding Corp., provide coverage for about 1 million of the Florida exchange plan users, or about 55% of all Florida exchange plan users.

Florida plans cover about 1.2 million, or 20%, of the 6 million people using cost-sharing reduction subsidies this year.

Republicans in Congress have questioned whether the Obama administration had valid congressional approval to make the cost-sharing reduction program payments from the beginning.

The Obama administration had argued that the same spending approvals that covered the Affordable Care Act premium tax credit subsidies covered the cost-sharing reduction subsidy program.

The case is still making its way through the federal courts.

States Other Than Florida

The Avalere analysis shows that a sudden termination of cost-sharing reduction subsidy payments could cost insurers in California $107 million and insurers in Texas $98 million.

Chris Sloan, a senior manager at Avalere, noted in a comment about the firm’s analysis that a mid-year cut could cause more problems for insurers than a full-year 2018 subsidy cut, because insurers now appear to be locked in to offering 2017 plans they designed and priced based on the assumption that the government would make cost-sharing reduction subsidy payments throughout 2017.

—- Centene, Hospitals Slide on Trump’s Plan to Stop Subsidies on ThinkAdvisor.

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