Illinois joins lawsuit as insurers brace for end of Obamacare subsidies

For months, the Trump administration has threatened actions to undermine Obamacare.

Now, less than three weeks before consumers can start buying health insurance on the Affordable Care Act’s exchange Nov. 1, the administration has made good on some of its threats, raising a host of questions for consumers.

The administration’s latest action follows months of worry for Illinois consumers, who are already bracing for higher premiums next year, fewer options and a shorter period of time to sign up for coverage through the exchange.

On Thursday, the administration said the federal government will stop making so-called cost-sharing reduction payments to insurers. Those payments compensate insurers for reducing deductible and copay costs for lower-income consumers who buy insurance on the exchange. Eighteen states, including Illinois, and the District of Columbia filed a lawsuit in federal court in California on Friday over the decision to end subsidy payments.

In Illinois, more than 350,000 people are enrolled in health insurance through the exchange, and about 175,000 of those consumers benefit from cost-sharing reductions.

Consumers will still get the cost-sharing reductions, but insurance companies no longer will receive federal money to help cover them. Qualifying consumers who buy exchange plans will also continue to get tax credits to offset the costs of their premiums.

But while the change might not have much impact on consumers’ wallets immediately, it does create uncertainty on two fronts — access to health care insurance on the exchange and its cost.

Insurers are allowed to pull out of the exchanges once the subsidies stop, said Timothy Jost, a law professor at Washington and Lee University in Virginia and an expert on the Affordable Care Act.

Illinois consumers already were facing fewer options on the exchange. In 13 counties next year, only one insurer is planning to offer individual plans — nearly double the number of Illinois counties that have only one insurer on the exchange this year.

However, Illinois’ largest insurer, Blue Cross and Blue Shield of Illinois, said Friday it plans to remain on the exchange next year, and it already took into account the possible end of subsidies when it filed rates for next year.

Two other insurers in the state’s exchange, Cigna and Health Alliance Medical Plans, did not explicitly state Friday whether they would participate in the exchange next year.

Cigna said the administration’s decision to discontinue the subsidies makes the long-term sustainability of the individual insurance market uncertain, “creating likely increases in future premiums.” Health Alliance Medical Plans, which offers exchange plans mostly in central and southern Illinois, said it also took uncertainty surrounding the subsidies into account when setting 2018 rates.

Centene Corp., the parent company of Celtic Insurance Co., did not respond Friday to a request for comment on whether Celtic plans to stay on the state’s exchange.

Insurers in Illinois have already committed to their rates, proposing average increases of 16 to 37 percent next year for the lowest-priced plans on the exchange. It’s possible some states might now allow insurers to refile their rates in light of the end of the subsidies, Jost said.

“We’re kind of in uncharted territory here,” he said.

But that may not happen in Illinois. Jennifer Hammer, director of the Illinois Department of Insurance, said in a statement that Illinois consumers should feel confident the rates and plan options released for 2018 won’t change, despite the end of the subsidies.

“We have been working for months to prepare for this very situation and protect consumers,” Hammer said in the statement.

It’s also unlikely the end of the subsidies will mean any changes for people with insurance through their employers, Jost said. Employer-sponsored insurance is a much bigger, more competitive market than the market for individual exchange plans, meaning it would be difficult for insurers to pass along higher costs to employers without losing their business, he said.

But the law’s advocates fear that people who buy health insurance through the exchange might think twice about enrolling, given all the uncertainty.

Earlier this week, President Donald Trump also signed an executive order allowing small businesses to band together to buy insurance and allowing consumers to buy short-term insurance, among other things. The order was met with mixed reactions.

If Illinois residents — especially healthy ones — don’t enroll in exchange plans, that could cause more problems. Insurance companies rely on healthy people to offset the costs of covering sick people.

“It destabilizes the market,” said Kathy Waligora, director of the health reform initiative of EverThrive Illinois.

Already, the Nov. 1 to Dec. 15 window to enroll in exchange plans is shorter than it was last year, and the federal government is reducing funding for outreach efforts. Also, the government enrollment website will be down for maintenance most Sundays during that time.

Given all the changes surrounding the Affordable Care Act this year, experts say it’s important for consumers to shop carefully.

In some states, for example, it’s possible some gold-level exchange plans might actually be better deals than some silver-level plans because of how states asked insurers to handle price increases due to uncertainty over the cost-sharing reductions, said Craig Garthwaite, an associate professor at Northwestern University’s Kellogg School of Management.