California: Two! Two! Two rate filings in one!!


I noted a week or so ago that according to David Anderson of Balloon Juice, rumor has it that many insurance carriers are making their actuaries work overtime to put together multiple rate filings for 2018 based on several different outlooks:

  • Trump/Price/GOP quit screwing around, officially fund CSR reimbursements, enforce the mandate penalty and generally implement the ACA in good faith.
  • Trump/Price/GOP cut off CSR funding but otherwise enforce the law somewhat reasonably
  • Trump/Price/GOP cut off CSR, don't enforce the mandate, keep mucking around with half-assed repeal/replacement bills
  • (etc, etc...several possible scenarios)

Today the California Insurance Commissioner, Dave Jones, made a formal announcement that this is exactly what CA insurance carriers will be allowed to do, and he isn't pussyfooting around with the reasons for the policy change either:

Commissioner Jones authorizes health insurers to file two sets of rates: “Trump Rates” and “ACA Rates”
Undermining of ACA by Trump Administration likely to cause increased rates

SACRAMENTO, Calif. — Insurance Commissioner Dave Jones announced today that he has authorized health insurers filing rates with the Department of Insurance to file two sets of rates, in light of the market instability created by President Trump's continued undermining of the Affordable Care Act (ACA). Despite the likelihood that health insurers will have to increase rates due to Trump Administration actions, Jones encouraged health insurers to file a second set of rates premised on continued enforcement of the Affordable Care Act, in the hope that President Trump might reverse course and stop undermining the Affordable Care Act.

The actions of the Trump Administration to undermine enforcement of the ACA's individual mandate and the failure of President Trump and Republican House leaders to ensure funding of the Cost-Sharing Reductions in the Affordable Care Act have created immense uncertainly and instability for 2018's health insurance market.  

Affordability and availability of health insurance coverage are both threatened by the actions of President Trump and Republicans in Congress. Next week health insurers will submit preliminary proposed rates for 2018 to state regulators and Covered California.

California's initial rate filings are due this coming Monday, though according to this CNBC article by Dan Mangan, they won't be made public until mid-July:

California's proposed rates are scheduled to be made public July 17, and finalized in early October, less than a month before the Nov. 1 kickoff for open enrollment in 2018 coverage. Obamacare enrollment on Covered California is projected to be 1.4 million currently by Charles Gaba, operator of the Obamacare-tracking site

Note: That 1.4 million current effectuation estimate assumes similar net attrition rates to last year. I also estimate around 700K CSR recipients in CA at the moment.

The uncertainty has put insurers in a difficult position. If they underprice their plans for 2018 relative to the costs they are likely to incur under the Republican bill, they would lose money. But if they overprice their plans relative to the current health-care law, and it remains in place, they risk losing business from customers turned off by the higher premiums.

Both Anderson and I have speculated that the carriers will simply jack prices up the wazoo to cover potential CSR losses...but that would also lead to a whole bunch of unsubsidized enrollees (both on and off exchange) dropping coverage altogether.

Jones' announcement came a day after Covered California issued a dire warning that the failure of the federal government to fund cost-sharing subsidies "could result in an estimated premium rate increase of 42 percent on average in California for 2018."

Covered California also warned that "failure to enforce the penalty for not having health insurance could result in total premium increases of more than 28 percent, and up to 350,000 consumers who would otherwise get coverage likely going uninsured in 2018."

I didn't get a chance to write about yesterday's CoveredCA press release earlier, but here it is. I'll be writing a separate post about it in a moment.