Trump pulling Obamacare subsidies is latest bitter pill for health insurance shoppers

In Illinois, nearly half of the roughly 314,000 people who bought Obamacare health insurance coverage last year did so with the help of a federal subsidy.

Nationwide, the tally is higher: on average 57 percent of the 10.3 million people with such a plan, according to the nonprofit Kaiser Family Foundation.

President Donald Trump announced that he wants to end that aid. The dollars technically flow to insurance companies whose coverage consumers buy on the online marketplace HealthCare.gov. Trump’s move comes just weeks before the opening of enrollment, which runs from Nov. 1 through Dec. 15.

“The Democrats’ Obamacare is imploding,” the president tweeted this morning. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”

The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!

— Donald J. Trump (@realDonaldTrump) October 13, 2017

In Illinois, nearly half of the roughly 314,000 people who bought Obamacare health insurance coverage last year did so with the help of a federal subsidy.

Nationwide, the tally is higher: on average 57 percent of the 10.3 million people with such a plan, according to the nonprofit Kaiser Family Foundation.

“The Democrats’ Obamacare is imploding,” the president tweeted this morning. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”

The move is the second major shakeup this week to the Affordable Care Act, his predecessor’s federal health insurance law known as Obamacare. Just yesterday, Trump signed an executive order to expand access to cheaper, short-term health plans that don’t cover as many benefits as Obamacare requires, and allow small businesses to band together to buy insurance across state lines.

The potential loss of subsidies drew quick reaction from insurers and their lobbying arms, including Chicago-based Blue Cross Blue Shield Association, a network of 36 independent, locally-operated Blues companies.

“These payments are not a bailout—they are passed from the federal government through health plans to medical providers to help lower costs for patients who see a doctor to treat their cancer or fill a prescription for a life-saving medication,” the Blue Cross association and America’s Health Insurance Plans, a giant trade group, said in a joint statement. “We need constructive solutions that increase consumer choice, lower consumer costs and stabilize local markets. Terminating this critical program will do just the opposite.”

SUBSIDY CUTS BAKED IN

In Illinois for 2018, four insurers have proposed to sell Obamacare plans via the federal exchange HealthCare.gov. Two of those insurers—Blue Cross & Blue Shield of Illinois, the dominant insurer by far in the state, and downstate Health Alliance—said they already considered the loss of subsidies when proposing rates for next year. The federal government still has to approve their plans and prices.

“Blue Cross & Blue Shield of Illinois has accounted for the uncertainty surrounding the federal government’s funding of the member’s cost sharing reduction benefit in our rates,” Colleen Miller, a spokeswoman for the Chicago-based insurer, said in a statement. “Therefore, today’s decision does not impact our market participation.”

Said Laura Mabry, a spokeswoman for Urbana-based Health Alliance: “Like other carriers, we are analyzing the impact of this news for 2017; however, we anticipated such a change in 2018 and considered that in our rate submissions to the Illinois Department of Insurance. For now, we will work with our state and federal regulators to determine next steps. As always, we will do all we can to ensure consumers have high-quality, affordable coverage available, and we will keep members and prospective members up to date.”

From Phil Mann, a spokesman for Bloomfield, Conn.-based Cigna: “Recent developments regarding these cost-sharing reduction payments bring further uncertainty to the long-term sustainability of the individual insurance market, creating likely increases in future premiums. In the meantime, Cigna will continue to honor the commitments that we have made to our customers who qualify for cost-sharing reduction payments. We encourage policy makers to work together to identify solutions that ensure affordable, quality health care coverage is available for the millions of Americans who rely on the individual insurance market.”

ILLINOIS IMPACT

The potential price hikes for Illinois Obamacare shoppers disclosed this summer already were a bitter pill to swallow. Insurers here have pitched double-digit increases for 2018. On average, the highest rate increase proposed for plans to be sold to small businesses is nearly 47 percent, and for consumers, 43 percent.

Some proposed rate hikes are much greater. Health Alliance wants to increase prices by 72 percent on a narrow-network HMO health plan for small businesses, for example. Cigna wants to increase prices from 17 to 162 percent.

“The theme that I think members of Congress and the Trump administration don’t understand is how this turns into real money for people,” said Barbara Otto, CEO of Smart Policy Works, a Chicago nonprofit that educates consumers and small businesses about the exchange. Low-income people could use money they saved by getting a subsidy to cover rent, groceries and public transit, she said.

Plus, the subsidies help keep young, healthy people in the exchange, Otto added. That’s a must for insurers to cover the costs of expensive, sick consumers who buy plans, too.

In a statement, Jennifer Hammer, director of the Illinois Department of Insurance, which regulates the industry, said consumers should “feel confident” that the proposed rates carriers submitted for exchange plans would not change.

“We have been working for months to prepare for this very situation and protect consumers,” Hammer said.

Still, while federal officials require insurers to publicly report if they want to hike premiums by 10 percent or more, by law they can’t reject them. Illinois insurance regulators can’t either.