Blue Cross and Blue Shield of Louisiana says it’s facing a $10 million shortfall this year in lost cost-sharing reduction payments that President Donald Trump ended.
Trump earlier this month stopped paying the CSR subsidies, which are part of the Affordable Care Act and are designed to offset the costs of reduced health insurance rates for low-income people. In anticipation of the move, both Blue Cross and Vantage Health Plan—the only two insurers in the ACA marketplace in Louisiana—raised rates for 2018.
In other words, “the damage is done” for next year, says Insurance Commissioner Jim Donelon. Rates will go up by an average of 18.5% in 2018, largely stemming from the expectation that Trump would end the CSR payments, which he did after the rates were filed.
The $10 million shortfall represents money Blue Cross would have received in the final quarter of 2017 had the payments been continued, spokesman John Maginnis says in a statement. Around 50,000 Blue Cross customers in Louisiana benefit from the reduced costs that CSRs facilitate, he says. Maginnis won’t speculate on whether or how much the shortfall could be mitigated if Congress passes a bill funding the payments this year.
“Without government funding of CSRs, our only choices are to raise premiums or walk away from the individual marketplace,” Maginnis says. “We’ve committed to the individual market for 2018, but unfortunately, we are forced to pass these unfunded costs of CSRs on to individual customers as premium increases to make up the difference.”
Lower-income people will still benefit from the reduced costs that CSRs fund. But those higher up on the income scale in the individual market will pay more for premiums next year.
Donelon says there have been no “threats” or other indications from Blue Cross or Vantage that they plan to leave the market in 2019 without the CSR payments. At the same time, Blue Cross has already lost more than $200 million on the individual exchanges since 2014, Maginnis says, and many insurers have already pulled out.
“It would be huge,” if Blue Cross left the market here, Donelon says. “I don’t think anyone in America knows what the next six months hold for the Affordable Care Act”
Maginnis says Trump’s statements calling the CSR payments “bailouts” for insurers are “simply not true,” citing the company’s multimillion dollar loss in the individual market in recent years.
However, Maginnis says the company is “pleased” with the direction of U.S. Sens. Lamar Alexander and Patty Murray, who have crafted a bipartisan deal that would fund CSRs for two years.
“We want to stay in the individual market,” Maginnis says. “We will continue working with our state and federal healthcare leaders to help ensure our residents will have continued access to the care they need at a price they can afford.”
—Sam Karlin
