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Health Connector Opts For Lower Insurance Rate Hike

Governors from left; Bill Haslam of Tennessee, Steve Bullock of Montana, Charlie Baker of Massachusetts, John Hickenlooper of Colorado and Gary Herbert of Utah speak during the Senate Health, Education, Labor, and Pensions Committee hearing to discuss ways to stabilize health insurance markets​, on Capitol Hill in Washington, Thursday, Sept. 7, 2017. (Jose Luis Magana/AP)MoreCloseclosemore
Governors from left; Bill Haslam of Tennessee, Steve Bullock of Montana, Charlie Baker of Massachusetts, John Hickenlooper of Colorado and Gary Herbert of Utah speak during the Senate Health, Education, Labor, and Pensions Committee hearing to discuss ways to stabilize health insurance markets​, on Capitol Hill in Washington, Thursday, Sept. 7, 2017. (Jose Luis Magana/AP)

Update: The Trump administration announced late Thursday plans to end the Affordable Care Act's subsidies designed to help low-income Americans get health care.

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The Massachusetts Health Connector will ready a plan of action in the event that the federal government cuts off certain insurance subsidies, but announced Thursday that it will use its standard 2018 rates and not significantly higher rates, as had been contemplated, for a subset of plans it offers.

With uncertainty around federal health care changes looming and the start of an open enrollment period less than three weeks away, the Health Connector and Division of Insurance prepared two sets of rates for 2018 to account for the possibility that the federal government will stop making monthly cost sharing reduction (CSR) payments.

As many as 80,000 consumers who buy their insurance through the Connector could be affected by the decision, and using the standard rates means that those consumers will see average premium increases of 10.5 percent next year. Had the second set of rates been adopted, consumers would have seen an average premium increase of 26.1 percent in 2018.

The Connector said its decision will protect "members from unwarranted premium increases" and ensure "stability unless future federal action eliminates Cost Sharing Reduction (CSR) payments."

"We spent significant time over the last few months with the Division of Insurance and our carriers discussing the ramifications of potential federal action cutting off CSR payments in the future, and felt it prudent for now to maintain a steady state for our members," Health Connector Executive Director Louis Gutierrez said in a statement Thursday. "We will continue to monitor the federal conversation around CSRs and continue to formulate a plan in case that funding is eventually halted."

The set of rates announced Thursday will be used for members enrolled in the Connector's silver tier plans which, according to the Connector "have lower premiums but higher costs when you get health care services."

Members in plans from tiers other than the silver tier will see average premium increases from a low of about 7 percent to a high of as much as 20.3 percent for the platinum tier, 12.6 percent for the gold tier, 13.8 percent for the bronze tier and 10.2 for catastrophic coverage plans, the Connector said.

In a letter to the Massachusetts congressional delegation last week, Gov. Charlie Baker said CSR payments to Massachusetts are estimated to be $146 million and said the uncertainty around the payments is a threat to tens of thousands Massachusetts residents.

As it puts together its contingency plan for the possible end of CSR payments, the Health Connector has another option that could blunt the impact of changes at the federal level.

On Sept. 8 the Baker administration submitted a Section 1332 waiver seeking to establish a Premium Stabilization Fund in lieu of CSRs and authority to waive CSRs and instead receive any federal premium tax credit savings that will accrue as a pass-through, which could be used to stabilize premiums via direct issuer reimbursement, according to the Connector.

A Connector official said Wednesday those requests typically take about seven months for the federal government to rule on, but that the Connector requested "aggressive fast-track review" and an answer by Oct. 15.

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