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story.lead_photo.caption Gov Asa Hutchinson is shown in this file photo.

In response to President Donald Trump's decision to end a subsidy for health insurance companies, Arkansas Insurance Commissioner Allen Kerr on Friday approved double-digit rate increases for the plans that will be offered on the state's insurance exchange next year.

The rates approved Friday will be sent to the Centers for Medicare and Medicaid Services to replace smaller increases the companies had submitted under the assumption that the subsidies, known as cost-sharing reduction payments, would continue.

Arkansas Blue Cross and Blue Shield, which had been set to increase its rates by an average of 7.8 percent for its plans covering more than 202,000 Arkansans, was approved Friday for a 14.2 percent increase.

St. Louis-based Centene, which has plans covering more than 93,000 and had been set for a 9.9 percent increase, was approved for a 21.4 percent jump.

The increase approved for Little Rock-based QualChoice Health Insurance, which has exchange plans covering about 41,000 Arkansans, went from 9 percent to 25 percent.

At the Insurance Department's instruction, the companies had submitted two sets of rates to the department in August. Kerr approved the smaller increases that month, which assumed the subsidies continued throughout 2018.

Gov. Asa Hutchinson said in a statement Friday that he was working with state agencies and the insurers "to minimize the impact of this change on private insurance consumers" and enrollees in the state's expanded Medicaid program known as Arkansas Works.

Most of the 300,000 people enrolled in Arkansas Works receive the coverage through private plans offered on the state's insurance exchange, with the state using Medicaid funds to pay the premium.

The loss of the federal cost-sharing payments won't directly affect funding the state receives for Arkansas Works, but the resulting premium increases could increase the cost of the program.

The premium increases are expected to be the greatest for so-called silver plans, which are the same ones the state uses to provide Arkansas Works coverage.

In light of the potential increase in the cost of Arkansas Works, "I just have huge questions about the future of the program," said Marquita Little, director of health care policy for Arkansas Advocates for Children and Families.

Arkansas is paying 5 percent of the program's cost through Dec. 31 and will pay 6 percent starting in January, with the federal government paying the rest.

The state has budgeted a total of $100 million for its share, out of a total cost of $1.8 billion, in the fiscal year that ends June 30.

To limit the program's cost, Hutchinson has requested federal permission to move about 60,000 people off the program by limiting eligibility to people with incomes up to 100 percent of the poverty level, instead of 138 percent of the poverty level, starting Jan. 1.

But even with fewer people enrolled, Joe Thompson, director of the Arkansas Center for Health Improvement, said the premium increases could raise concerns.

"If it increases the cost on Arkansas Works, it raises the question of cost-effectiveness, and I think it also threatens the level of political support necessary to continue the program in the fiscal session" next year, when state lawmakers will approve funding for fiscal 2019.

The waiver authorizing Arkansas Works limits the cost of the program to an estimate of what coverage would cost under the traditional, fee-for-service Medicaid program. If the cost from this year through 2021 exceeds a limit established in the waiver, the state will owe the difference to the federal government.

Hutchinson spokesman J.R. Davis said the cost of the program is "something we're going to have to continue to look at."

The cost-sharing subsidies are one of two types of assistance provided under the 2010 Patient Protection and Affordable Care Act to people who don't qualify for Medicaid who buy insurance through health insurance exchanges.

Tax credit subsidies lower the premiums for many consumers with incomes below 400 percent of the poverty level: $47,520 for an individual, for instance, or $97,000 for a family of four.

The cost-sharing reduction payments reimburse insurers for increasing the amount of coverage provided through silver-level plans to consumers with incomes below 250 percent of the poverty level.

Such plans are designed to cover 70 percent of a typical consumer's medical expenses. For lower-income consumers, however, the plans are modified so that they cover up to 95 percent of the expenses. The cost-sharing subsidies reimburse insurers for providing that enhanced coverage.

Ruling in a lawsuit filed by Republicans in the U.S. House of Representatives, a federal judge has said that the cost-sharing payments, unlike the tax credits, were never authorized by Congress.

The judge had allowed the payments to continue while the case was on appeal, but the Trump administration ended them on Thursday after Attorney General Jeff Sessions issued an opinion agreeing with the judge's conclusion.

Through the end of this year, insurers will have to continue providing the enhanced coverage to low-income consumers, but won't be reimbursed, Arkansas Blue Cross and Blue Shield spokesman Max Greenwood said.

Next year, she said, the higher premiums will help make up for the loss of the payments.

Under Arkansas Works, Arkansas uses Medicaid funds to provide identical cost-sharing subsidies that reduce co-payments and deductibles for private-option enrollees. Those Medicaid subsidies weren't affected by the Trump administration's action.

The size of the tax credits are tied to the premiums for silver-level plans, meaning the increases approved Friday are likely to result in larger tax-credit subsidies for individuals who qualify.

Because the increases are concentrated in the silver plans, even consumers who don't qualify for tax credits might be able to avoid the brunt of the increase by switching to a cheaper bronze plan, offering less coverage, or a gold plan offering more generous benefits.

Little said the changes, combined with reduced federal spending on consumer outreach, are likely to create confusion during the open enrollment period that runs from Nov. 1 through Dec. 15.

"It's doing the very thing we feared -- creating instability in the marketplace and confusion and chaos," Little said.

A Section on 10/14/2017

Print Headline: State rates jump as subsidy paid to insurers ends; For Arkansas’ health plans, double-digit increases OK’d

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  • Jfish
    October 14, 2017 at 7:37 a.m.

    The entire insurance industry (health, home, auto, etc.) is a racket. They just pass on any costs to the consumer without any reform. I am in my 50's and never had a home or auto claim, yet my premiums are not significantly lower than those who have. Also, I am one of three people that I know who have actually paid to have their roof replaced. 95% of the people that I talk to claim hail damage. A person with a 25 year old roof pays the same as a person with a 1 year old roof on a hail damage claim, explain that one. You can probably expect your home premiums to go up also because of the recent hurricanes. Although people build too close to the coasts and poor city planning cause these event to be much worse than they have to be, nothing will change.

  • RobertBolt
    October 14, 2017 at 8:04 a.m.

    Trumpsters are getting their self-destructive wish.

  • RBear
    October 14, 2017 at 8:09 a.m.

    Jfish, no dispute on the issues related to costs but show me a Republican who would be bold enough to enact legislation with more restrictive building codes or controls. In Texas, any attempt at regulation along the coast failed in the Republican controlled legislature. Any attempt at creating a wind pool to offset the costs falters when measures to increase the reserve are proposed.
    ...
    Putting this back on track, Republicans continue to weaken the insurance reserve by segregating the risk pools, driving up costs in those pools with less healthy individuals. I hate to be partisan on this, but Democrats have understood the need for cost control and shared risk for decades. Republicans hack at the system, creating the funding challenges of the pools.

  • Jfish
    October 14, 2017 at 8:24 a.m.

    I agree RBear, follow the money and 9 times out of 10 it will lead you to the address of a major lobby in DC.

  • NoUserName
    October 14, 2017 at 8:24 a.m.

    "I am in my 50's and never had a home or auto claim, yet my premiums are not significantly lower than those who have"
    .
    And? I wouldn't disagree that there should be SOME difference, but that's the whole point of insurance.

  • TimberTopper
    October 14, 2017 at 8:32 a.m.

    fish and no name, at least every 3 years you should shop all your insurance coverages, with as many companies as you can.

  • skeptic1
    October 14, 2017 at 9 a.m.

    Trump has no choice, his party refuses to govern. Obamacare never should have been passed the way it was and it is imploding now, maybe congress' constituents will pressure them into doing their jobs or be tossed out.

  • Jfish
    October 14, 2017 at 10:04 a.m.

    Timber, you are probably right, I am loyal to a fault and hate change. I understand NUN, but what is my incentive for being a safe driver and taking care of my roof?

  • drs01
    October 14, 2017 at 10:17 a.m.

    When you take away the carrot that enticed insurance companies to partner in the fraud that is Obamacare, you get a true picture of the cost. Now, maybe there will be honest, intelligent efforts to replace it.
    Frankly, I had better coverage at much cheaper rates before this Obamacare was crammed down our throats or stuck up the other end.
    I'm reminded of a saying from my school days, "there ain't no free lunches; someone must always pay".

  • JakeTidmore
    October 14, 2017 at 10:29 a.m.

    The opponents of the Affordable Health Care Act look more and more idiotic every day. The Trumpsters are getting ripped in their health insurance rates and amount of coverage because of Trump's decrees. Republican lawmakers are doing this to their voters and those fools still think it's Obama's fault. Were they born stupid or did they evolve that way???

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