The Trump administration decision late Thursday to stop paying a key “Obamacare” subsidy is roiling Montana’s health-insurance market for individuals – and could spell trouble for at least one Montana insurer in this market.
The decision increases costs for the three health insurers providing individual polices to 66,000 people in Montana. But two of them may not be allowed to adjust their 2018 premiums to cover those costs.
One of them – the Montana Health Co-op – likely will stop doing business in Montana next year if it can’t adjust its 2018 rates, said Co-op President Larry Turney. The Co-op insures 22,000 Montanans.
Loss of the subsidies will cost the Co-op $1.6 million a month this year alone, Turney said.
State Auditor and Insurance Commissioner Matt Rosendale, a Republican and outspoken opponent of the Affordable Care Act (“Obamacare”), said Friday that Trump administration officials are instructing him that insurers in Montana’s market cannot adjust their policy premiums for next year.
Turney said the Co-op plans to appeal that decision to federal health officials.
The Trump administration said late Thursday that it considers the payments illegal because Congress never authorized them, and therefore will discontinue the payments "immediately." Former President Barack Obama had authorized the payments, but U.S. House Republicans sued to stop them.
A federal court ruled in Republicans' favor last year, but that decision had been on appeal.
The other company that may want to adjust its 2018 rates in Montana is PacificSource, which has 12,000 individual customers in Montana.
Todd Lovshin, PacificSource vice president for Montana, told MTN News that the company is evaluating its options at this point.
Enrollment for 2018 policies in the individual market begins next month.
Blue Cross and Blue Shield of Montana, however, does not need to adjust its rates, because it already filed a 20 percent average increase in premiums for its individual 2018 policies, anticipating possible changes by the Trump administration.
“Insurers really had two choices at the outset of developing their 2018 products: You could either include this uncertainty in your rates or you could choose not to include this uncertainty,” said Blue Cross spokesman John Doran. “And we were the only insurance company that elected to do that.”
Blue Cross has about 32,000 individual policyholders in Montana.
The Trump administration decided to stop subsidies to insurers to cover what are known as cost-sharing reductions, or CSRs, which reduce out-of-pocket costs for low-income policyholders.
Eligible policyholders – as many as 30,000 people in Montana -- will still get the discounts, but insurers now must pay the cost, instead of the federal government.
The Trump administration said the payments, made since 2014, were never authorized by Congress, and therefore are illegal and should be stopped.
U.S. Sen. Jon Tester, D-Mont., said the move will “spike insurance costs that are already way too high” and called it an act of “deliberate sabotage” by the Trump administration, designed to undermine the Affordable Care Act.
Tester called on Congress to override Trump’s decision on the subsidies and is sponsoring a bill to achieve that goal.
But Montana’s Republican U.S. senator, Steve Daines, indicated he won’t be supporting the bill or efforts to keep paying the subsidies.
“Obamacare has been a train-wreck since day one, and giving billions to big insurance companies won’t fix it,” he said in a statement. “It doesn’t solve the underlying problem that government-run health care isn’t affordable.”
Turney, the Co-op president, said the move by the Trump administration is a clear attempt to undermine the ACA.
“They’re definitely trying to make Obamacare fail, and they’re giving it a little push to do it,” he told MTN News. “The people who can afford it the least will be paying more for their policies.”
However, Turney said it’s possible that the overall rates for many customers wouldn’t change that much next year, because another major subsidy remains intact – for now.
Lovshin said despite the uncertainty in the market, consumers should continue paying for their policies now and strongly consider signing up again for 2018. Rates will be unchanged for the rest of the year, he said, and the effect on rates for next year remains to be seen, he said.