The head of Maine’s health insurance cooperative worries that a new health care bill passed by the U.S. House this week could hurt the market for individual insurance policies, which is the nonprofit’s core market, and hurt those with pre-existing conditions.
Cuts to insurance subsidies and tax credits could cause some members of the cooperative to drop their policies, said Kevin Lewis, the president and chief executive officer of Community Health Options, on Friday. About 24,000 Mainers receive subsidies under CHO individual plans. On Thursday, the House approved a measure designed to replace the Affordable Care Act, the health care plan that has been in place for seven years and relies on subsidies to help people pay their premiums.
The House bill now goes to the Senate, where many predict it will face strong opposition and may be substantially altered. President Trump supports the House bill and said he will lobby the Senate to pass it.
Lewiston-based CHO was one of the few cooperatives to succeed financially when the Affordable Care Act, or Obamacare, was adopted in 2010. But after turning a small profit in 2014, CHO lost $31 million in 2015 and $58.3 million last year as policyholders – many of whom had gone years without health insurance – accessed medical care at a high rate. Many quickly satisfied their out-of-pocket limits, forcing CHO to cover the cost of their care for the rest of the year. The cooperative’s losses in 2015 snowballed as the year went on.
It set aside $43 million in reserves in anticipation of 2016’s losses and has shed customers, cut expenses, raised premiums and also left the New Hampshire market at the end of last year. CHO doesn’t anticipate a loss this year and is currently working on its premium plan for 2018, which must be approved by the Maine Bureau of Insurance.
Typically the co-op submits its rate request to state regulators in the spring, which is decided by the Bureau of Insurance in the summer and enacted the following January.
‘UNACCEPTABLE’ EXCLUSIONS
The House bill would allow some states to get a waiver around a current requirement that insurers cover people with medical conditions that are expensive to treat. Those people could be put into a “high-risk” pool for coverage of pre-existing conditions, with the federal government pledging it would provide some money to help underwrite the coverage for those individuals.
“The concern is that the funding will be insufficient to finance the high-risk pool,” Lewis said, making policies unaffordable for many people.
Maine has a law that requires insurers to offer policies to those with pre-existing conditions at the same prices as for those without. That law would need to be changed before Maine could seek a waiver on the coverage requirement of those with pre-existing conditions.
Before the ACA was passed, some people with pre-existing conditions couldn’t even get health insurance. Any attempt to restrict access to health care for people with pre-existing conditions runs counter to CHO’s core philosophy, said Lewis.
“Leaving out large portions of our community and imposing tremendous financial hardship by virtue of genetics or bad luck is unacceptable to us as a mission-based, consumer-directed, nonprofit health plan,” he said.
Lewis said CHO is trying to lower health care costs while making sure its policyholders get better care.
“We don’t see how that is possible through the imposition of pre-existing condition exclusions,” he said.
AFFORDABILITY AND DEMAND
Lewis also said a major concern with the House bill is a reduction in government subsidies. About three-quarters of CHO’s individual members receive a subsidy to help pay their premiums on the insurance. About 75 percent of CHO’s 43,000 policyholders are individually insured, while the rest are group insured.
If those individual policyholders drop their coverage, it could result in a return to the “death spiral that the individual market was in” before the ACA was adopted, Lewis said.
Nationally, the market for individual health care policies has tripled since 2013, Lewis said, which is viewed as “a measure of success” of the health care law.
Lewis said the prospect of canceled policies is also worrisome because larger markets help insurers spread the financial risk and are more stable. But if premiums become unaffordable because of the reduction or loss of subsidies, some of the healthier insured people might drop their coverage, he said, leaving a smaller pool of less healthy – and therefore more expensive – cooperative members to share the costs.
“If it impacts the market, it’s going to impact us,” Lewis said, although he declined to predict what the financial cost might be for CHO because he hasn’t had time to carefully analyze the details of the bill yet.
Lewis said CHO was in contact with Maine’s congressional representatives to express concerns about the House plan, and will do the same with its U.S. senators as that body takes up the proposal.
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