Montana Health Co-op

The Montana Health Co-op says it is pulling out of Montana's health insurance exchange after President Donald Trump ended subsidies for insurance for low-income Montanans. Co-op officials in the Helena office chat in this photo taken in August.

One of the three companies selling health insurance on the marketplace in Montana mandated by the Affordable Care Act said Friday it could stop offering plans after actions by Republican President Donald Trump.

Trump announced late Thursday he would immediately end subsidies paid to insurance companies to offset the costs for people with lower incomes who buy insurance on exchanges. He also signed an executive order to expand short-term insurance plans and explore expanding association health plans, under which small businesses can join together to buy health insurance. 

Karen Early, director of operations for Montana Health Co-op, said the Co-op was told subsidies would end starting this month.

"It's an untenable position," she said. "It's not survivable."

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.

Three companies sell on the exchange here: Blue Cross and Blue Shield of Montana, Montana Health Co-op and PacificSource. Both the Co-op and PacificSource did not account for the subsidies ending in their 2018 rates submitted to the state earlier this year, but Blue Cross did, leaving it in a much better position.

The Co-op covers 20,000 Montanans who bought plans through the exchange. PacificSource has 12,000 members through the exchange. Blue Cross and Blue Shield, the largest, has nearly 32,000.

Blue Cross's average rate increase for 2018 was 22.3 percent, while the Co-op's was 4 percent and PacificSource's was 7.4 percent.

"Our rates assumed the cost-sharing reduction payments would be paid," Early said. "This is a significant amount of money. It would be impossible for the Co-op to remain in business in Montana without raising rates."

Insurers stressed Friday nothing will change for people who already have plans for 2017.

The co-op, however, said it may not be able to offer plans on the marketplace for next year unless it can increase its rates. On Friday, Commissioner of Securities and Insurance Matt Rosendale said that wasn't possible. Open enrollment for 2018 starts Nov. 1.

"As Commissioner of the Montana Department of Insurance I have been notified by the Center for Medicare and Medicaid services that Montana health insurers are ineligible for a re-filing of adjusted insurance rates for 2018," said a release from Rosendale's office.

Early said the Co-op is appealing to the Centers for Medicare and Medicaid. She stressed people who already have plans will be covered for the duration of the policy, but "whether or not we will continue to offer insurance for 2018 remains to be seen."

It is too early to tell if PacificSource will continue to sell insurance on the exchange next year, said Vice President Todd Lovshin on Friday.

"We're working to understand the process moving forward and what kind of impact this has. It's been barely 24 hours since the executive order. We're really still evaluating it."

About 46 percent of PacificSource's Montana members, or 4,300 people, who purchased insurance on the exchange benefit from cost-reduction payments.

Cost-sharing reduction payments are required by law, so insurance companies must keep making them even when federal reimbursements end. The payments have been called into question since 2014, when House Republicans filed a lawsuit saying the payments were illegal. The Obama administration appealed the ruling. Nationally, payments were expected to be $9 billion in 2018.

John Doran, divisional vice president of external affairs for Blue Cross and Blue Shield of Montana, said about 17 percent of the company's average 22 percent rate increase for 2018 was to account for the end of the subsidies and other changes.

“We said all along that even if the ACA remained the law of the land, there was no guarantee that the rules of the road wouldn’t change, and that’s what we’re seeing this week,” he said. “Blue Cross and Blue Shield of Montana accounted for the uncertainty surrounding the federal government’s funding of the member’s cost-sharing reduction benefit, as well as the extension of the short-term product timeline, in our 2018 rates. Therefore, today’s decision does not impact our market participation or our 2018 rates.”

Republicans in Congress failed several times this year to execute their party’s long-promised repeal and replace of the Affordable Care Act, also known as Obamacare. A common tagline used by the party is that Obamacare, as the law is often called, is in a "death spiral," and point to a number of places where insurance companies have withdrawn from the market.

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.

Last month at a conference for those in the insurance industry, Rosendale said Montana was in a better position than most states because it had three companies selling on the exchange.

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Trump’s actions are seen by Montana’s Democratic U.S. Sen. Jon Tester as a way to undermine the system in the face of Congress’s failure to act.

“This decision will spike health insurance costs that are already way too high. This deliberate sabotage forces Montanans to spend even more of their money on health care, draining their already strained bank accounts,” Tester said.

The rest of Montana’s delegation, Republicans Sen. Steve Daines and Rep. Greg Gianforte, had a more positive take.

“President Trump discontinued unconstitutional funding for a program started by President Obama and which used taxpayer money never appropriated by Congress,” Gianforte said in a statement.

Daines also issued a statement, saying, “We can’t bail out big insurance companies. It doesn’t solve the underlying problem that government-run health care isn't affordable.”

At a conference for those in the insurance industry last month, Rosendale tried to encourage consumer confidence through next year.

"I can assure you any insurers that sell health insurance policies in the state of Montana, regardless of whether (subsidies) are paid or not, will be covered through 2018, and I think that is the most important thing for us to be looking at," he said.

The District of Columbia and 17 states, not including Montana, filed a lawsuit Friday over the move to end subsidy payments. The states are Kentucky, Massachusetts, Connecticut, Delaware, Maryland, Oregon, North Carolina, Illinois, New York, Vermont, Pennsylvania, Rhode Island, Virginia, Minnesota, New Mexico and Iowa.

Gov. Steve Bullock, a Democrat, criticized Trump's actions and called on Congress to fund the cost-sharing reduction payments.

"Abruptly ending cost-sharing reduction payments is an irresponsible and unnecessary move that will negatively impact nearly half of all Montanans enrolled in the marketplace. The actions coming out of our nation's capital in the last couple days are causing significant challenges for those of us on the ground actually dealing with the consequences,” he said. “Congress must take action to fund the cost-sharing reduction payments immediately."

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State Bureau reporter for The Independent Record.

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