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Consumers lose out in Trump's decision to cut off insurer subsidies, ND insurance commissioner says

BISMARCK-President Donald Trump's decision to cease health insurer subsidies under the Affordable Care Act could raise premiums in North Dakota, the state's insurance commissioner said Friday, Oct. 13.The cost-sharing reduction payments compensat...

North Dakota Insurance Commissioner Jon Godfread. (Special to Forum News Service)
North Dakota Insurance Commissioner Jon Godfread. (Special to Forum News Service)
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BISMARCK-President Donald Trump's decision to cease health insurer subsidies under the Affordable Care Act could raise premiums in North Dakota, the state's insurance commissioner said Friday, Oct. 13.

The cost-sharing reduction payments compensate insurers for reducing out-of-pocket costs for low-income people buying Obamacare marketplace plans. Insurance Commissioner Jon Godfread, a Republican, said the 42,000 North Dakotans who are on the individual marketplace are "likely going to see some effect from this" in the form of rate adjustments.

"We think it's unfortunate that these CSR payments have been ultimately politicized," he said. "The big loser in this is the ... consumers who rely on those subsidies."

Sen. Heidi Heitkamp, D-N.D., warned the move would raise premiums, reduce access to care and add almost $200 billion to the deficit.

"This disheartening decision was about claiming a political win, not supporting American families," she said in a statement.

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The White House said late Thursday the government "cannot lawfully make the cost-sharing reduction payments." It referred to the subsidies as "unlawful payments" that amounted to a "bailout of insurance companies."

"Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people," the White House statement said.

The Congressional Budget Office has projected that the payments would total $7 billion in fiscal year 2017.

House Republicans, arguing that Congress hasn't appropriated funds for the subsidies, sued in 2014. The case has been pending before an appeals court after a federal judge sided with the Republicans, according to the Washington Post.

Rep. Kevin Cramer, R-N.D., said he agreed with the president's decision "to not unilaterally cut a check, because it's illegal." But he said Congress has "some obligation" to take up the issue as an appropriation.

"Hopefully we'll do that," Cramer said. "But with that appropriation will most likely come ... policy changes."

Heitkamp cosponsored a bill this year to permanently appropriate the payments, her office said. Sen. John Hoeven, R-N.D., said he supports "legislation that repeals and replaces Obamacare but also provides a short-term stabilization fund to help stabilize insurance rates."

Trump has derided the subsidies and previously threatened to cut them off. Godfread cited uncertainty around the payments when he announced last month that Medica would leave North Dakota's individual exchange in 2018.

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Medica spokesman Greg Bury said Friday morning they didn't know how the news might affect their presence on the North Dakota exchange.

"We're waiting for guidance from the federal government before either we or the ND Department of Insurance know what our options are," he said in an email.

Godfread's office assumed the subsidies would continue when it approved premium increases for 2018. Blue Cross Blue Shield of North Dakota customers who buy individual coverage through the exchange face average premium increases of 22.6 percent, while individuals covered by Sanford Health Plan would see an average 7.9 percent bump.

Tony Piscione, vice president of actuarial services for Blue Cross Blue Shield of North Dakota, said they're still analyzing how the loss of the subsidies will affect them. He took issue with the characterization that they're "bailouts" for insurers.

"We provide the benefit to our members, and then the government reimburses us," Piscione said. "It really is benefitting the consumer in the end."

Kirk Zimmer, Sanford Health Plan's executive vice president, said "it's very likely" that they'll continue to participate in the individual marketplace, but there "will be policies that will go up in price."
In North Dakota, the average premium for a silver plan in the ACA marketplace would need to jump 9 percent to compensate for the loss of CSR payments, the Kaiser Family Foundation estimated in April. That's the smallest increase among the 38 states that used HealthCare.gov in 2016.

"We have to make sure it's still affordable to our consumers, as affordable as it can be," Godfread said.

Open enrollment for next year's coverage under the ACA begins Nov. 1 and lasts 45 days.

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