Georgia Obamacare customers already feeling the pain of rate hikes could be in for even worse if Washington doesn’t get its act together, researchers in the nation’s capital and Georgia said.
President Donald Trump and Republicans in Congress have threatened a key subsidy that makes the Obamacare exchange market work. But they have not passed a new plan in its place. According to a report released Tuesday by the nopartisan Congressional Budget Office, removing that subsidy, known as cost sharing reductions, would raise some Obamacare premiums even more, by 20 percent initially.
Moreover, it would increase the federal deficit by $194 billion over the first 10 years because the law would require a different federal fund to take its place. Beyond that, canceling the subsidy would cause all kinds of changes, some good, some bad, but adding up to a tremendous amount of upheaval. People would be knocked off coverage or suddenly find it affordable; millions of people could shift how they get coverage, from whom and where, and companies would be in turmoil redoing their coverage areas and plans.
The subsidies paid to insurers allow them to require customers to pay less in out-of-pocket costs.
Georgia health care activists with different viewpoints were united in calling for action from lawmakers to stabilize the state’s insurance situation.
“To me, it’s yet another bit of chaos in the market that indicates we need to do two things,” Kelly McCutchen, the president and CEO of the libertarian-leaning Georgia Public Policy Foundation, said of the report. “As a state, we need to move forward on a waiver plan immediately,” he said, referring to initiatives where the administration lets states set their own plans for managing Obamacare. As to the federal government, “they need to get back to work to address a reform plan because uncertainty is the problem.”
Laura Colbert, the executive director of the patient-advocacy group Georgians for a Healthy Future, is especially concerned about rural patients.
Ninety percent of Georgia’s Obamacare customers would be protected from the cost hikes by another kind of subsidy that they qualify for, which would fill the gap. However, Colbert added, “many middle- and higher-income people, and families who do not get any help purchasing insurance, would be hit with higher prices.”
"I think in general, there's a lot of uncertainty in the marketplace already," Colbert said. "Adding more uncertainty to it through the consequences from removing the (subsidies) would be harmful. It's just not a positive thing right now."
McCutchen would not address whether the subsidies should continue. The problem for insurance companies right now, he said, is that they don’t know what to charge because they don’t know what’s coming.
Officials with the CBO briefed reporters on their findings Tuesday in a national conference call. They said that a key date comes in September, when insurance companies must settle on the rates they intend to charge in 2018. If the government yanks the subsidies after that, it will be much more disruptive to the market, they said.
The uncertainty surrounding the cost-sharing reductions came after Congressional Republicans sued to stop the president from paying them; then this year, Trump spoke of them as a negotiating chip and tweeted that they are “BAILOUTS.”
If Congress and the president are interested in securing the subsidies or finding a replacement policy to tamp concern, there are barriers.
Congress is on recess until after Labor Day, so that makes it difficult for lawmakers to take action in time for the insurance companies’ filings.
Trump could try to instill confidence in the market that he will pay them by making a forceful statement. But as a leader who places great emphasis on dealmaking, it is an open question whether he would give up what he sees as a powerful negotiating chip purely for a policy goal.
Even now, Blue Cross Blue Shield of Georgia has filed notice it intends to pull out of the individual market in 74 of Georgia's 159 counties, specifically citing the uncertainty over the subsidies. If there's no more certainty by fall, it has reserved the right to pull out of even more counties. The insurer has filed plans to raise its rates by some 40 percent, again citing the uncertainty.
Other insurance companies filed rate requests indicating they would charge more if the subsidies were yanked, or they filed requests that implicitly included higher prices taking the uncertainty into account, business analysts said.
“In any business opportunity, perceived risk affects the pricing,” said Chris Kane, a consultant on health care insurance and hospitals. “The recent legislative dynamics in Washington do not foster confidence in the boardrooms of health insurance companies.”
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