The Kaiser Family Foundation has estimated that insurers would need to raise premiums on mid-tier “silver” exchange plans nearly 20 percent for 2018, if CSRs are eliminated.
To account for the risk that the administration could pull the plug on CSRs, many states instructed insurers to submit two sets of rate requests. As a result, some states are now showing just how the Trump administration’s decision on the subsidies will directly impact premiums next year.
Covered California, the Golden State’s health exchange entity, said that if payments were stopped, exchange plan insurers would be allowed to impose a “CSR surcharge” of 12.5 percent on silver plans next year — which would result in a rate increase of up to 27 percent.
“A decision by the federal government is needed in the next few weeks,” said Peter Lee, executive director of Cover California, in a news release. “Without clear confirmation from the administration that these payments are secured, we will be forced to have health insurance companies in California add a CSR surcharge to the Silver-tier rates.”
Most exchange plan enrollees who receive tax credits may not feel the full brunt of the increases, because higher premium rates would also result in higher tax credits.
“The federal funds will simply shift to (tax credits) from CSR, and continue to support eligible individuals,” said analyst Deep Banerjee, of S&P Global ratings, in a note to research clients,. He added, those who don’t receive tax credits “will feel the full brunt of the increase, resulting in a mix of dis-enrollment and buy-downs (to cheaper plans).”