November 10, 2017

NM insurance premiums jumped after Trump actions

New Mexicans who buy health insurance through the Affordable Care Act’s exchange will pay higher premiums this year, and recent actions by the Trump administration are a big reason why.

Customers who earn $47,000 or more and are not covered by employers will see the largest bump.

This all comes as open enrollment began on Nov. 1 and will run through Dec. 15. Nationwide, the country saw a spike in enrollment through the federal website over the previous year on the first day.

Paige Duhamel, the health care policy manager at the Office of Superintendent of Insurance, broke the news to legislators at a Legislative Health and Human Services committee hearing last week.

“2018,” Duhamel said, referring to the fiscal year, “has been, as you all have probably seen in the news, a bit nuts.”

She listed reasons why the year has been difficult for health care, including the uncertainty of whether Congress would repeal the ACA or replace it (congressional efforts fell short), the uncertainty of cost-sharing reduction (Trump ended a subsidy plan for companies) and uncertainty in the enforcement of the individual mandate (Trump is reportedly ready to gut it).

Superintendent of Insurance John Franchini echoed this, and cited the cost-sharing reductions as a defining reason.

Without this elimination, Franchini said, there would have been very little increases in premium costs. But after the decision by Trump, “the rate went up between 28 percent and 40 percent in New Mexico.”

Counties in other areas of the state have seen even larger increases before of the decisions.

The ACA still provides for aid for the poor and near-poor who seek insurance coverage but do not qualify for Medicaid.

There are two main ways to subsidize health insurance for these consumers. For those making under 400 percent of the federal poverty level, they can receive financial assistance monthly to purchase their premiums, called advanced premium tax credits. For those who make under 250 percent of the federal poverty level, they can receive subsidies through “cost-sharing reductions.” These help lower out-of-pocket costs.

In New Mexico, one of the poorest states in the nation, almost three-quarters  of those who bought insurance through the exchanges get advanced premium tax credits. Twenty-five percent receive cost-sharing reductions.

The executive order by Trump to end the cost-sharing reduction subsidies doesn’t mean that the program will end.

“Because it is in statute, the insurance companies now have to fund those cost-sharing reductions,” Duhamel explained.

To do so, she explained, insurance companies have raised their premiums.

“If you see information around increasing premiums, that’s what that this is,” she said. “That’s largely a result of that executive action.”

Melissa Roberts, a Ph. D with the University of New Mexico College of Pharmacy, said decisions by New Mexico in how to implement the ACA have eased some of the financial pressures for customers. That includes Gov. Susana Martinez’s expansion of Medicaid, a move not widely shared by her Republican colleagues in other states.

In addition, New Mexicans have more options than most other places in the country.

For example, there are four health insurance carriers on the exchange in every county in New Mexico. This is because New Mexico required insurers to offer insurance in all counties, not on a county-by-county basis, as most other states allow.

“In other parts of the country there are often only one carrier for people to choose from,” Roberts explained.

“Our belief was, and it has been proven to be true, if the policyholders and citizens of the state have choices they can make good choices for themselves,” Franchini said.

That increased competition helps with premiums, as does the Medicaid decision.

“The Medicaid expansion states…tends to be lower than the non-Medicaid expansion states and it tends to be lower when it’s only one carrier,” she explained.

Lisa Cacari Stone, a Ph. D. with the College of Population Health, called the Medicaid decision “an important buffer for the marketplace.”

Still, she highlighted the importance of diversifying the risk pool—essentially getting younger, healthier people to sign up for insurance, lowering risk for insurance companies and so lowering premiums for everyone.

Franchini says it’s vital for the young people to have health insurance as well, to protect them.

”We all need to have healthcare and health insurance because even the young ones that are teflon, a tragedy can hit, an emergency can hit and health insurance and healthcare costs can be in the hundreds of thousands of dollars, even for a 16- or 18-year old person,” he said.

For those worried about the cost, Franchini recommended the office’s new health insurance comparison tool. By entering the zip code and age, residents can see what a health plan will cost them. They can also estimate how much financial assistance they might receive.

Franchini joked that even though he is not computer savvy, “Even I can do it.”

Martinez’s decision to expand Medicaid also had other unexpected impacts. Since the “baseline” health plan is based on a silver-level plan, it actually means that some counties have bronze-level health plans with no cost attached. This is because financial assistance makes up for the gap.

And in some cases, gold-level plans now may cost the same or less than silver plans. That’s because only silver-level plans are eligible for credits.

But overall, it’s customers who make more than $47,000 a year and buy insurance through exchanges who will be impacted the most in 2018. Those people earn too much compared to the federal poverty level to get financial assistance. But the premiums are still increasing for them.

“Those are the folks who are going to be having more difficulty paying for healthcare costs,” Duhamel said.

Overall, Franchini said things are looking good in New Mexico.

“It is working in spite of chaos from D.C., it’s working in New Mexico,” he said.