From the San Jose Mercury News:
Covered California on Tuesday announced that health insurance rates on the state’s health insurance exchange created under the Affordable Care Act will increase by an average rate of 12.5 percent for 2018 plans.
Peter Lee, CEO of the exchange, said the increase normally would have been just under 10 percent, but for a 2.8 percent tax on health insurers that resumes next year.
But a bigger threat — the possibility that the Trump administration kills certain Obamacare subsidies — would increase rates by another 12.4 percent, he said, though Covered California has a work-around plan to avoid that scenario. ...
Anthem Blue Cross of California will leave markets that comprise about half of its enrollment — except for Santa Clara County, the Central Valley and certain Northern California counties.
That means 153,00 of those enrolled in Anthem plans through the exchange today will need to select a new plan for 2018. ...
Anyone who earns between 139 percent and 250 percent of the poverty threshold — between $34,200 and $61,500 for a family of four — [has also been] eligible for additional reductions, which lower out-of-pocket costs such as co-pays and deductibles.
About 7 million Americans, including roughly 650,000 Californians, receive those extra subsidies. And the federal government reimburses insurers on the exchanges about $7 billion to reduce the cost of the co-pays and deductibles for those low-income people.
[The end of those] subsidies would send many premiums soaring because health insurers would have to pick up those costs themselves, and many companies would also likely flee the markets, experts say.
Covered California continues to seek clarification from the Trump administration about its intentions regarding the cost-sharing payments. But Lee said if the exchange doesn’t receive confirmation by the end of the month that the payments will continue, an additional average 12.4 percent surcharge will be attached to plans when enrollment opens Nov. 1.The above article from the Mercury News did an adequate job in summarizing the rate increases and exit of Anthem, however, it did not explain the illegal cost reduction subsidies that have been forbidden in federal court. In an attempt to not rock the boat too much (believe it or not), the Trump administration has been continuing these payments but that practice is not likely to continue. Michael Cannon at the CATO Institute explains:
Another [issue] is the illegal “cost-sharing” subsidies President Obama began issuing – and that President Trump is still issuing – to insurers participating in ObamaCare’s Exchanges. In a case where the House of Representatives challenged the payments, a federal judge ruled that issuing those payments “violates the Constitution” and ordered them to stop, pending appeal. The Obama administration was pursuing an appeal, but the Trump administration has not indicated whether it would continue to appeal that ruling or enforce the judge’s order. Trump must do one or the other.
Two of President Trump’s cabinet picks have practically forced his hand on this issue.
When the federal district-court judge issued her ruling striking down the cost-sharing subsidy payments, Health and Human Services Secretary Tom Price was a Republican member of Congress. He issued a statement endorsing the ruling:
Today, Congressman Tom Price, M.D. issued the following statement after a federal judge ruled in favor of House Republicans’ lawsuit against Obamacare, saying that the Administration does not have the power to spend money on “cost sharing reduction payments” to insurers without an appropriation from Congress:
“The ruling proves a momentous victory for the rule of law and against the Obama Administration’s overreach of Constitutional authority,” said Congressman Tom Price, M.D. “This historic decision defies the Obama’s Administration’s ask that the courts disregard the letter of the law and reasserts Congress’s power of the purse as defined by our nation’s founders in Article One of the Constitution.”
“In recent weeks, we’ve seen insurers announce that they will exit the exchange markets in 2017, further deteriorating patients’ access and choice to health care plans that they want. This is yet again proof that Obamacare is on an unsustainable path, and House Republicans must remain committed to repealing and replacing this law. As a member of the Health Care Task Force, I’m honored to be working with my colleagues to advance positive, patient-centered solutions to the challenges in our health care system."
Price has made clear his view that Congress did not appropriate funding for these payments, and that continuing to make them would constitute executive overreach and violate the rule of law. If President Trump chooses to appeal the lower-court ruling, he would put Price in a situation where he would have to help implement a policy that he considers unconstitutional. Price arguably would have to resign.
Yesterday, Trump’s attorney general Jeff Sessions expressed his view that the payments are unconstitutional and that the lawsuit challenging those payments “has validity to it.” If Trump chooses to appeal the lower-court ruling, Sessions would be the guy who carries out that appeal. It would be…awkward for him to defend a policy he believes to be unconstitutional.
