COVERED CALIFORNIA UPDATE FROM CALIFORNIA ASSOCIATION OF HEALTH UNDERWRITERS (CAHU):

Cost Sharing Reduction Payments - Fight Breaks Out

Many questions are being asked regarding what will happen in California with Cost Sharing Reduction payments (CSRs) ending.  President Trump announced October 12, 2017, that his administration will not be making any more CSRs payments.  There had been discussions with Congressional leaders regarding a one- or two-year extension and fade out of CSRs as part of a number of the repeal and replace efforts.  Nothing came of the discussions by the end of September 2017.   As background, CSRs are payments designed to help health insurance plans offer lower co-pays and deductibles for low-to-middle income individuals and families when they buy health care coverage through the Covered California marketplace.

Now 17 states, including California, are suing the Trump Administration regarding that policy.  The states are seeking a temporary restraining order, preliminary injunction and permanent injunction requiring the cost-sharing reduction payments be ongoing.   CAHU will provide more information on this lawsuit as it becomes available.

Covered California Reaction to the CSR Elimination

Over the past several months, Covered California has been issuing alerts to the health insurance world, including agents, that there may be a 12.4  percent (Cost Sharing Reduction Pament) CSR surcharge on silver plans purchased through the Exchange marketplace if nothing at the federal level occurred to stabilize CSR payments to plans.

The warning became reality when Covered California announced on October 11, 2017, that they are officially adding the 12.4 percent surcharge due to failure at the federal level to provide certainty regarding the future of CSRs.  Covered California Silver plans were already looking at a 12.4 premium increase for 2018 policies.  With the additional 12.4 percent, Covered CA Silver Plan premiums will increase 25 percent overall.

It is important to note that the surcharge only impacts silver-level plans sold by Covered California or their mirror silver health plans are required to offer if they wish to sell some products in the Exchange. The surcharge does not affect other Covered California metal tiers and plans offered outside of Covered California.

Congress Cancels Vote on Republican Healthcare Replacement as ACA Marks Seventh Anniversary

After a turbulent week of marathon negotiations to appease enough members of the House Republican caucus to support H.R. 1628, the American Health Care Act (AHCA), leadership in the House of Representatives decided to scrap a vote on the bill roughly an hour before it was scheduled this afternoon. Throughout the day it became increasingly clear that Republicans did not have enough votes to reach the 215-vote threshold for passage in the chamber, with unofficial whip counts showing as many as 50 Republicans expected to vote against the package. The decision to not hold the vote was made by President Trump and House Speaker Paul Ryan (R-WI), both of whom made separate statements at 4:00 p.m. this afternoon that they will be working to figure out next steps, but that the ACA will remain for the foreseeable future.

President Trump noted that he would be open to attempting a repeal of the ACA again with continued failures of the current law. Ryan attributed the bill’s failure to win consensus today due to growing pains of learning how to govern instead of being the opposition party. He noted that “doing big things is hard” and that they would need to find ways for their members to say yes to the good even if it is not the perfect. He and the president agreed that the wise course of action would be to pull the bill and work to find ways to get consensus.