CHA News Article

Covered California Board Acts to Promote Stability of Individual Health Insurance Market

At its meeting last week, the Covered California Board of Directors announced it would take three actions in an effort to stabilize the individual health insurance market and continue to provide consumers with choice and the lowest rates possible in the face of persistent national uncertainty. First, Covered California will wait until Sept. 30 to decide whether its health plans must add a cost-sharing reduction (CSR) surcharge to Silver-tier plans. In past years, the federal government reimbursed health insurance companies for those costs; that funding is now in question. If Congress and the President decide to fund CSRs by Sept. 30, rates for Silver-tier plans could move forward without the added CSR surcharge. If a decision is not made by Sept. 30, Covered California will implement its contingency plan in which the total premium would reflect the CSR surcharge for consumers with Silver-tier plans who receive subsidies.

However, Covered California reports that, in most cases, consumers would not see a “net” change in what they would pay since their premium tax credit would also increase. Last week, a report from the Congressional Budget Office found that ending the CSR reimbursements would raise premiums by about 20 percent in 2018 and 25 percent in 2020 and subsequent years. In addition, because the premium tax credit would rise along with the premiums, ending CSR reimbursements would increase the federal deficit by $194 billion over the next 10 years.

Secondly, the board adopted new contract language intended to provide health plans with more assurances during this time of uncertainty in order to maximize consumer choice and participation in 2018 with the lowest rates possible. If a carrier incurs unanticipated losses in 2018 due to changes in existing federal policies or other uncertainties, such as the lack of enforcing the individual mandate, the carrier will be able to request a recoupment of those losses over a three-year period (plan years 2019 to 2021). Also, if a carrier experiences unanticipated profits due to changes in existing federal policies, such as the resumption of a reinsurance fund, those profits will be factored into their rates over the next one to three plan years.

Finally, the board approved an increase of approximately $5 million to Covered California’s marketing and outreach budget for 2018, for a total of $111 million. The additional funding will be used to increase the number of television and radio ads around key dates throughout the upcoming open-enrollment period, which will run from Nov. 1 through Jan. 31. Covered California will also engage in a more robust regional marketing direct-mail campaign for consumers affected by the CSR surcharge.