Two insurance companies that sell individual plans on the federally mandated exchange created under the Affordable Care Act have raised their rates and will continue to offer plans in 2018, according to the state insurance commissioner.
The Montana Health Co-op, which previously said it would no longer offer plans if it was not able to increase rates, submitted rate increases that put its new overall average increase at 16.6 percent, instead of 4 percent. PacificSource's overall average is 13.1 percent, instead of 7.4 percent.
The two companies said last week rate increases were necessary to account for President Donald Trump ending cost-sharing reduction payments, or subsidies, paid by the federal government to insurances companies that are mandated by law to provide the subsidies to lower-income customers who purchase individual plans on the exchange. The third company selling on the exchange, Blue Cross and Blue Shield of Montana, had already increased their rates an average of 22.3 percent to account for the payments ended.
Trump's decision, along with an executive order to expand short-term plans, has been seen as a move to destabilize the marketplace. Republicans often point out the number of counties in the country with zero or just one company selling on the exchange as a sign the Affordable Care Act, also known as Obamacare, is in a "death spiral." Democrats say much of the instability has been created by Republican sabotage after that party failed to deliver its long-promised repeal and replace of the landmark health care bill.
A September projection by the Centers for Medicare and Medicaid showed 63 counties, or 2 percent of the counties in the U.S., would have no insurers on the exchange, while 1,472, or 46 percent, would have just one.
The subsidies are required by to be paid by insurance companies by law, but Republicans have challenged the reimbursement by the federal government since 2014.
The new rate increases will only affect silver-level health insurance plans on the individual market.
About 63,800 Montanans buy health insurance on the exchange. About 43 percent, roughly 25,000, benefit from the subsides, called cost-sharing reduction payments. Average payments are $1,147.
Matt Rosendale, the insurance commissioner, said Thursday the rate increases mean all three companies will continue to sell on the exchange.
“I want to reassure Montanans that they will still have three insurance companies and multiple plan options to choose from when selecting health insurance plans on the individual market,” Rosendale said.
After initially saying last Friday that Montana insurers would be ineligible for re-filing rates, the federal Centers for Medicare and Medicaid reversed its decision.
Montana law states that health insurers “shall submit a new filing to reflect any material change to the previous rate filing,” so long as the changes are filed at least 60 days before the rates go into effect, which is Jan. 1. A legal analysis by Rosendale's office determined that the end of subsidy payments constituted a “material change.” The insurance commissioner’s office does not have the legal authority to deny these rate increases.
Rosendale's statement also took a stab at the Co-op for telling statewide media last week it could no longer offer plans in 2018 if it was not allowed to increase rates.
“I remain incredibly disappointed and frustrated that the Montana Health Co-op and PacificSource have chosen to raise rates on their customers,” Rosendale said. “While we must continue to work together through changes at the federal level, both companies had assured me that they would have been able to honor their prior rates, even if (cost-sharing reduction payments) were not paid. The companies will now have to answer to their customers for their reversal in that assurance. I want to specifically correct the premature and misleading information put out by the Montana Health Co-op. The Co-op will be staying in the Montana marketplace, and consumers should disregard prior statements contrary to that fact.”
The Auditor’s Office is working to update its rate sheets for specific insurance plans. Consumers will have access to plan-specific information before open enrollment begins on Nov. 1.
Karen Early, director of operations for Montana Health Co-op, said the Co-op is pleased to continue to be a part of the exchange in Montana.
"We’re just happy to have our rates approved and to be able to continue serving Montanans in 2018 and beyond."