States enter the breach to protect ObamaCare

State officials are using every tool at their disposal to try to keep their insurance marketplaces stable in the face of uncertainty from the Trump administration over the future of ObamaCare.

Insurance commissioners are working with providers, advocates and insurance companies to help keep the system running, but it’s an uphill climb. 

Insurers are skittish and pleading for certainty from Washington. They want assurances that they will continue to receive cost-sharing reduction (CSR) payments from the federal government, which total about $7 billion this year. Those payments reimburse insurers for providing discounted insurance to low-income ObamaCare enrollees.

They also want assurances that the administration will enforce the mandate requiring people to have insurance or pay a penalty.

States don’t have a lot of options, but some officials are actively trying to make sure the public is shielded as much as possible from the consequences if Trump follows through on his promise to let ObamaCare “implode.”

“In general there’s not a whole lot they can do, because states don’t have any more information about what the Trump administration is doing than insurance companies,” said Cynthia Cox of the Kaiser Family Foundation.

Some states are letting plans file multiple sets of rates to account for the uncertainty. The strategy can work, Cox said, if all insurers are on the same page. 

“The concern is that one company assumes the worst case scenario and adds 40 percentage points on for uncertainty, and another assumes the best case and prices significantly lower,” Cox said. 

The administration has been sending mixed signals about whether it will take the dramatic step of ending payments to insurers. The CSRs have been paid on a monthly basis, but the administration has not promised that will continue.

If the administration does cut off the CSRs, some states will add a surcharge onto certain plans to cover the cost of losing those payments. 

California, North Carolina and Pennsylvania, for example, say they will increase the cost of all the mid-level “silver” health plans that consumers can buy on the exchange. 

The idea is that by making the silver plans more expensive, the other plans will be cushioned from the price increase. If the price of a silver plan increases, tax credits that help customers purchase insurance will also increase.

But states will have to educate consumers about why the change is taking place.

“Customers are going to be confused and [insurance] carriers will have to explain” why one plan is so much more expensive than the others, Katherine Hempstead, senior adviser to the executive vice president at Robert Wood Johnson Foundation, said. 

So-called “silver loading” isn’t a new idea, Hempstead said, but if states decide they can’t wait for the administration to make a decision, it becomes “more and more likely this is the situation states are going to be in.” 

Pennsylvania is telling insurers to price as if there was no uncertainty, but Pennsylvania Insurance Commissioner Teresa Miller told The Hill that may have to change.

“We were hoping we could keep rates in single digits but if we don’t get certainty [from the administration] we will have to let [insurers] build it in,” she said

If the CSRs were funded, rates would only increase an average of 8.8 percent in the state’s plans. Without CSRs, Miller said rates would rise over 20 percent on average. 

States are also preparing for the possibility that the administration stops spending money to promote enrollment in the exchanges.

The Obama administration ran advertisements to encourage enrollment, but Trump officials have signaled that promotion effort might come to an end. If that happens, states could spend their own money on outreach and promotion.

Some states are better prepared for such a campaign than others; blue states with an insurance department that supports the law are likely to have more resources available. 

Miller said her state is planning a massive outreach effort. 

The goal is “to encourage Pennsylvanians to enroll in coverage and highlight the benefits if they do,” Miller said. “We’re working with various stakeholders to develop and coordinate messaging.”

Miller said she wasn’t sure the state could reach as many people as the federal government. 

“If all of us have the same messaging, the same materials … the hope is that we can reach a lot of people. I don’t know if we can fill this gap completely, but we’re going to do everything we can,” she said. 

Michelle Osborne, chief deputy insurance commissioner of North Carolina, said the state’s General Assembly would have to appropriate money for the department to engage in outreach, but wouldn’t speculate if that might happen.

One thing states can’t do anything about is the possibility that the Trump administration will stop enforcing the individual mandate.

Without a mandate, insurers fear that only sick people would remain in the market, causing premium increases.

According to a recent Kaiser Family Foundation analysis, insurers factoring in the possibility that the administration will not enforce the individual mandate increased their rates an additional 1.2 to 20 percent. 

Cox said part of the problem is public perception.

“It’s not just that insurers assume [the mandate] won’t be enforced, it’s a public perception that it won’t be. That’s a harder issue for states to address,” she said.