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Do Maine’s Health Plan Rate Increases Herald The Affordable Care Act’s Implosion?

For the second year in a row, average premiums in Maine’s Affordable Care Act marketplace will see double-digit increases. Maine’s insurance superintendent has approved rate hikes for 2018 plans that range from 18 to 27 percent.

Despite the increase, health policy analysts say the market is not imploding, as President Donald Trump has predicted — but they do say that Congress must take immediate action when it reconvenes in September to stabilize the market.

The three insurers on the Maine ACA marketplace asked for even higher increases, but in a decision issued on Thursday, state Insurance Superintendent Eric Cioppa approved rates 2-5 percent below requests. Community Health Options was allowed to increase premiums an average of 18 percent, Anthem an average of 19 percent and Harvard Pilgrim an average of 27 percent.

The bright side, says Steve Butterfield, policy director for Consumers for Affordable Health Care, is that most consumers — about 86 percent of those on the marketplace in Maine — will be shielded from the increases.

“When you receive tax credits, the premium you pay is based on your income, not necessarily what the premium is of your plan,” he says.

But those who earn too much or too little to qualify for tax credits will be forced to absorb the increases. Butterfield says the rising premiums are due to two factors: rising health care costs and uncertainty about the future of the ACA.

“Last year was supposed to be the course correction. Last year was the year where insurers were really starting to figure out how this market worked. It wasn’t until all this uncertainty started appearing at the federal level, and the administration started making threats about undoing it from within, that you started seeing these problems,” he says.

“These increases are much higher than they needed to be,” says Mitchell Stein, a Maine-based independent health policy consultant.

Stein points to three recent analyses — from Standard and Poor’s, the Congressional Budget Office and the Kaiser Family Foundation — that each determined the ACA market was stabilizing. But Stein agrees with Butterfield that actions by the Trump administration are disrupting that progress.

“Because the law has to be implemented fully, and that’s not what’s occurring,” he says.

Trump has threatened to discontinue cost-sharing reduction reimbursements to insurers, which are used to lower costs for some consumers. To prepare for that scenario, Maine insurance companies proposed and were approved for even steeper increases — 20-37 percent — if those reimbursements end.

But Stein has a bigger concern: the possibility that the Trump administration won’t enforce the individual mandate that requires everyone to purchase health insurance.

“If the mandate were eliminated completely, then we could end up in that classic death spiral scenario. And that could undermine the market more completely than just the elimination of the CSR payments,” he says.

The death spiral is a situation where insurance premiums rise high enough that they drive away healthy consumers and leave sicker consumers. That further increases costs, creating the same scenario again and again.

Both Stein and Steve Butterfield say the death spiral isn’t imminent and it can be avoided. But it will take action by congressional lawmakers when they return in September to fund the cost-sharing reimbursements and to enforce the individual mandate.

This story was originally published on Aug. 11, 2017. This story is made possible by a grant from the Doree Taylor Charitable Foundation.