The Massachusetts Health Connector announced last week it would use the lower of two rate sets for some of its plans, but President Trump's decision hours later to end certain federal insurance subsidies means the Connector will use the higher rates after all.
With uncertainty still prevalent about the federal health care landscape, the Health Connector and Division of Insurance had prepared two sets of rates for its 2018 plans, including one featuring bigger rate increases that accounted for the possibility the federal government would stop making monthly payments to insurers known as cost-sharing reduction (CSR) payments.
Last Thursday, they announced they would use their standard rates — meaning an average premium increase of 10.5 percent for as many as 80,000 consumers — and form a contingency plan in case the CSR payments were cut off.
But a late-night announcement from the White House that same day brought word that Trump would end the payments. The Connector said Friday it would consider "alternative pathways," but officials announced Thursday they are uploading the higher rates.
The move to the higher rates — which will bring premium increases of about 26 percent to the affected members — was disclosed Thursday in a letter Gov. Charlie Baker sent to the state's congressional delegation, informing them of happenings at the Connector and asking them to support a bipartisan health care bill developed by Sens. Lamar Alexander and Patty Murray.
Baker wrote that the Connector "had delayed implementing its rates" for the 2018 plan year in hopes of Congressional action to authorize the subsidies and stabilize the insurance markets.
"However, the lack of affirmative congressional action requires the Connector to load into its system adjusted rates for open enrollment that take into account increased premiums to cover the loss of CSRs," Baker wrote. "Today, the Connector will be loading these adjusted 2018 premiums, which are higher than 2017 rates by an average 18 percent above the expected 8 percent increase, into its system."
The open enrollment period for 2018 begins on Nov. 1, less than two weeks away.
Baker said some Connector members "will be protected from these increases," because of offsetting tax credits, but up to 80,000 people "are not eligible for premium tax credits and will face the full impact of these premium increases." These 80,000 people earn more than 400-percent of poverty, about $45,000 a year for a single adult, and buy silver-tier plans on the Connector. Those plans will increase 26 percent on average next year.
The Connector says there are two ways to avoid the dramatic premium increases.
One way is to buy a bronze or gold tier plan, rather than silver, through the Connector. The other would be to skip the Connector and buy directly from a health insurer. In a twist of insurance rules, nearly identical silver plans will be available at lower prices. Silver plans purchased outside the Connector will have one technical difference: a higher copay on home health services. That single change makes the plans different from certified silver plans available through the Connector and means insurers can charge a lower rate.
"So these people need to shop," said Audrey Gasteier, the Connector's chief of policy and strategy. "We'll be in touch with them to inform them of these options but we do need these people to take action so they can wind themselves out of this situation that they've been put in."
The end of the CSR payments also "creates an unfunded liability of approximately $28 million for the remainder of the calendar year for carriers," according to Baker, who said his administration is "committed to taking whatever steps are necessary to protect the stability of the health insurance market for 2017."
Baker's office has not said how he would fund the $28 million, about $10 million of which is due to insurers this week.
Baker on Wednesday joined nine other governors on a letter to top U.S. House and Senate Republicans and Democrats, asking them to fund the CSR payments through 2019 and hold votes on the Alexander-Murray bill.
The White House's announcement that it would end CSR payments said the subsidies were unlawful because Congress had not appropriated the money for them, and described the payments as a "bailout of insurance companies" and an Obama administration effort to "prop up a broken system."
State officials have said the decision could mean the loss of $146 million for Massachusetts health insurers next year.
Health Connector spokesman Jason Lefferts confirmed the choice of the higher premiums in a statement to the News Service, saying they were necessary "to cover the loss of federal Cost Sharing Reduction payments to health insurers" and attributing it "to the lack of an affirmative resolution by either Congress or the courts."
"We are implementing a full-scale member communication campaign that starts immediately and will continue through Open Enrollment, which begins on November 1st, and we encourage members to shop around for the best plan for individuals and their families," Lefferts said.
Attorney General Maura Healey last week joined top prosecutors from 17 other states and the District of Columbia to file suit in California in hopes of bringing back the subsidies.
On Wednesday, the attorneys general filed an emergency motion asking that the court require the Trump administration to continue making the CSR payments, including the one that would ordinarily be made Oct. 20.
"President Trump is sabotaging health care for millions of Americans," Healey said in a statement. "Hundreds of thousands of Massachusetts residents receive affordable health insurance coverage through the Health Connector, and I'll fight to ensure the continued stability of the market."
With additional reporting by WBUR's Martha Bebinger