By Chad Terhune, California Healthline
Republicans are touting their health plan as the right medicine for ailing insurance markets across the country, from Arizona to Tennessee.
But California never landed in sick bay. Its insurance exchange, Covered California, features the healthiest mix of customers nationwide, federal data show. That’s been instrumental in holding down rates and boosting enrollment to 1.5 million.
Now state and insurance industry officials fear the replacement plan for the Affordable Care Act, introduced by GOP leaders this week, would threaten those gains. They warn that the proposal, which would cut subsidies to lower-income consumers, could undermine the broader market, driving up premiums for the wide range of Californians who purchase their own coverage.
Republicans and some industry analysts say those fears are overblown and that the GOP replacement plan would strengthen the individual insurance market by lowering premiums for young, healthy people and offering more latitude on covered benefits. In any case, the Trump administration said the plan was not final, describing it as a “work in progress.”
Nearly 90 percent of Covered California enrollees rely on federal premium subsidies and many could drop coverage if they lose thousands of dollars in government assistance. And the ones who do stay insured are likely to be the sickest and costliest patients, according to some experts.
In response, health insurers would be forced to significantly raise rates in the individual market, both on and off the exchange. It could mark a return to the double-digit rate hikes routinely seen before the 2010 health law.
“The worst possible thing is a market that tends to just have sick people,” California Insurance Commissioner Dave Jones said. “That is exactly where the Republican proposal is taking us. It’s a recipe for disaster.”
Peter Lee, executive director of Covered California, predicts a downward spiral if only the sickest customers hang onto coverage. The net effect of the Republican proposal “would be to increase the costs for everyone in the individual market since the lower-income people that do enroll are likely to be sicker and costlier — raising the premiums paid by everyone covered.”
Under Obamacare, premium subsidies are tied to income and the local cost of coverage. The less people earn, the more financial assistance they receive. The Republican plan pegs premium tax credits only to age, starting out at $2,000 a year for people under 30 and increasing to $4,000 for those over 60.
Those credits begin to phase out for people making $75,000 a year or more.
The chief executive of Molina Healthcare, an insurer in Covered California and other exchanges, said the GOP’s age-based tax credits are inadequate for people to maintain insurance. Dr. J. Mario Molina said premium rate hikes could reach 30 percent next year in California and other states if Congress and the Trump administration don’t do more to stabilize the marketplaces. This year’s increase in California was an average of 13.2 percent.
“This bill is not making me more optimistic about the future of the marketplaces,” Molina said. “There is nothing here providing any comfort or relief.”
The Blue Cross Blue Shield Association, which represents California’s Anthem Blue Cross and other big insurers, expressed similar concerns in a letter this week to House Republicans.
“The flat tax credit which is adjusted by age, but not by income or premium, does not give healthy people enough incentive to stay in the market, especially in absence of an individual mandate,” the group wrote.
For more information go to Kaiser Health News.