Local Health Insurers Brace For Loss Of Millions In Federal Subsidies

Oct 16, 2017

President Donald Trump last week cut off federal subsidies that help to cover the cost of health insurance for low-income patients. The decision is expected to drive up premiums for the middle class.

Health insurance companies in Rhode Island stand to lose nearly $18 million dollars in federal subsidies under President Trump’s new executive order.

The subsidies were created by the Affordable Care Act. They reimburse insurers for offering discounts on copayments and deductibles for low-income customers. Those discounts help nearly 17,000 Rhode Islanders who buy coverage through the state exchange, known as HealthSourceRI.

Peter Marino is president and CEO of the insurance company Neighborhood Health Plan of Rhode Island. He said ending the subsidies will drive up the price of coverage for other customers on the state exchange.

“It’s really raising the price of health care,” Marino said. “And despite all the political rancor that the president has said about trying to make healthcare more affordable, this actually does the opposite. It makes it harder for working folks to afford health care.”

That’s because insurance companies will still have to offer discounts to low-income residents. Only now, they’ll make up the cost by charging higher premiums to everyone else, instead of recouping the money from the federal government.   

Marino said Neighborhood expects to seek premium hikes around 13 percent next year.

Zach Sherman runs the health care exchange HealthSourceRI. He said higher premiums will make it harder for many residents to keep their coverage.

“It will have the impact of, starting in 2018 health insurance premiums going up significantly and resulting in us going backwards in the great progress we’ve made in the last several years in achieving near universal coverage,” Sherman said.

Currently about 96 percent of Rhode Island residents have health insurance, one of the highest insured rates in the country.

But Sherman said the Trump administration’s decision couldn’t come at a worse time.

The next enrollment period for state health exchanges begins in about two weeks.

“I think that they tactically did this to be as disruptive for our customers as possible going into open enrollment,” Sherman said.

Several states, including Rhode Island, Massachusetts and Connecticut are contesting the end of low-income subsidies in a multi-state lawsuit. The Trump Administration says the subsidies were never legal because Congress didn’t approve them.