90-day delay in ACA subsidy lawsuit adds to uncertainty for insurers

The Trump administration has asked for a 90-day delay on a ruling which could end Affordable Care Act (ACA) subsidies to insurers, pushing back a potentially market-destabilizing move but offering little assurance to actuaries working on 2018 rate requests for the ACA exchanges.

The subsidies could end thanks to a lawsuit brought by House Republicans against the Obama administration. In the case, they argued the ACA didn’t appropriate the funding needed for the cost-sharing reduction subsidies, or CSRs, which are payments made directly to insurers in exchange for reducing copays and deductibles for lower-income marketplace enrollees.

In private, Trump has reportedly favored cutting off the payments to force Democrats to negotiate on an ACA replacement plan. He could no longer defend the Obama-era case, which would mean an earlier U.S. District Court ruling in favor of the House Republicans would go into effect.

Instead, both the House and the Department of Justice asked for another 90-day hold on an appeals court ruling, during which time the administration has said CSRs will continue to be paid.

While the move offers relief in the short-term, it’s less than what major medical organizations had wanted. In a May 19 letter to Senate leaders, America’s Health Insurance Plans, the American Medical Association, the American Hospital Association and others asked for immediate funding of the CSRs, citing the uncertainty as “the single most destabilizing factor causing double-digit premium increases for 2018.”

“We recognize and understand the Senate is working on legislation that includes provisions intended to promote short-term stability in the individual market. However, in light of 2018 filing deadlines, most of which fall on or before the June 21 deadline for federally facilitated marketplaces, health plans have only a few more weeks to decide whether and how to participate in this market. In several states, the deadline to file products and initial rates has already passed,” the groups wrote.

A similar letter from the National Association of Insurance Commissioners said without some guarantee the CSRs will be funded, more insurers will opt not to participate in the ACA exchanges for 2018. Some state regulators, including California, are allowing insurers to file separate proposed rates: one assuming the CSRs will be funded, another in case they’re not.

At the same time, the CSRs remain mired in the political battles over the ACA’s future. A report from the Los Angeles Times claimed CMS Administrator Seema Verma offered insurance companies a quid pro quo on the subsidies: If insurers publicly backed the American Health Care Act (AHCA), the administration-backed bill to replace the ACA, then it would fund the CSRs.

HHS has denied such a bargain was offered, but four ranking Democrats on congressional committees have asked for more information, including whether Verma or any other HHS employee offered any kind of deal in exchange for supporting the AHCA, which has been almost universally opposed by major industry groups.

“Your reported actions suggest you are using the operation of the American healthcare system as a tool to gain leverage in political negotiations,” wrote Reps. Richard Neal, D-Massachusetts, and Frank Pallone, D-New Jersey, along with Sens. Ron Wyden, D-Oregon, and Patty Murray, D-Washington.