Trump's threat to cut Obamacare funding could cause Iowa premiums to spike even more

Iowans who buy their own health insurance could face even bigger premium increases next year if President Donald Trump follows through with a threat to cut off a major stream of Obamacare assistance, the state's sole remaining carrier said Monday.

Iowa’s health-insurance market is already teetering, with just one carrier planning to sell individual policies here next year. That carrier, Medica, has proposed raising Iowa premiums by 43 percent in order to keep up with fast-rising costs of caring for chronically ill Iowans. On Monday, Medica’s spokesman said the company would propose another 12 percent to 20 percent in increases on top of that 43 percent if Trump stops payments from a low-profile but important part of Obamacare.

The payments in question help insurers cover the costs of deductibles and co-pays for members with moderate incomes, who might otherwise be unable to use insurance they obtain with Obamacare premium subsidies. Trump has threatened before to stop making the “cost-sharing reduction” payments. He appeared to revive that threat Saturday as he voiced frustration over his party’s inability to repeal the Affordable Care Act last week.

“If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!” the president declared on Twitter.

Individual insurance policies are the kind of coverage many consumers buy if they aren’t offered insurance from employers or government programs, such as Medicare and Medicaid.

About 72,000 Iowans who buy individual insurance were on the cusp of losing all options after two large carriers, Aetna and Wellmark, announced in April that they would stop selling such policies here next year. But Medica, a small carrier based in Minnesota, said in June that it intended to continue selling individual insurance in Iowa.

However, it said it would need to increase premiums by more than 43 percent in order to cover its costs. Many consumers would face even steeper increases, because they would have to switch from cheaper Aetna policies to pricier Medica plans. On Monday, Medica upped the ante again when it said it would need to raise rates even more if Trump cuts off Obamacare’s cost-sharing money.

Medica has until September to decide for sure if it will sell individual health policies in Iowa next year. Spokesman Greg Bury said Monday that the company would not pull out of the market due to Trump’s renewed threat to pull the plug on Obamacare’s cost-share reduction program. But Bury said the company would need bigger premium increases to stay in Iowa if the threat is carried out.

A White House spokesman declined to comment on the record about the situation in Iowa. 

Medica's premium increases would take the biggest bite out of Iowans who make too much money to qualify for assistance under the Affordable Care Act. For a single person, the annual income limit for those subsidies is about $47,000. People who make more than that and buy their own health insurance could see their premiums increase by more than 60 percent next year.

Iowa Insurance Commissioner Doug Ommen said Monday that roughly 25,000 of the 72,000 Iowans whose coverage is at risk make too much money to qualify for Obamacare subsidies to help pay their premiums. "It just breaks my heart to be thinking about what families are going to be struggling with," he said in an interview. Some Iowa families of four could be facing annual health-insurance premiums of $30,000, he said. 

Many moderate-income Americans receive Obamacare subsidies to help cover their costs of obtaining and using private health insurance. Those people would be sheltered from much of the premium increases that Medica says it would need to impose.

Medica customer Karen Slessor of Reinbeck receives an Obamacare subsidy, but she's worried her carrier will quit the Iowa market altogether if Trump keeps threatening to withhold funding. "I think it's ridiculous this is so partisan," she said. If Medica left, Iowans like Slessor could have no options for insurance. "It makes me really nervous," she said. 

A national health-care think tank contends cutting Obamacare’s $7 billion cost-sharing program could backfire on the federal budget. Experts from the Kaiser Family Foundation predicted the move would induce insurance carriers to jack up their premiums. That would automatically cause more spending under Obamacare’s premium-subsidy program, which the president has less authority to control, Kaiser said.

A leading Iowa insurance broker expressed frustration Monday about the gamesmanship. "I"m so disappointed. This is so political,"  said Lynn Schreder, president of the Iowa Association of Health Underwriters.

Schreder, a co-owner of the KHI Solutions insurance brokerage, said she hopes the issue becomes moot if federal officials approve a "stopgap" plan proposed by Ommen, the insurance commissioner. Under that plan, the federal government would reorganize Obamacare subsidies and help shoulder the costs of particularly high-risk patients. Schreder believes it would encourage more carriers to participate in Iowa's individual insurance market. "I'm hanging my hat on that," she said.

Ommen paused for several seconds Monday after a reporter asked how optimistic he was that federal administrators would approve his stopgap plan. "We're still hopeful," he finally said. "We're still working as hard as we can toward a solution." But he warned that the Obamacare rules surrounding such waivers are "rigid." 

Ommen portrays his stopgap plan as a temporary way to prop up an insurance market that is collapsing as prices rise and healthy people stop buying coverage. The insurance commissioner, who was appointed by a Republican governor, expressed disappointment that Congress failed to pass a plan to address the fundamental problems. "Congress has to act," he said.

The issue ran aground last week in the U.S. Senate, where Republicans narrowly failed to push through bills that would have reined in the Affordable Care Act. Iowa's Republican senators, Chuck Grassley and Joni Ernst, voted for those bills. The Register asked their offices Monday whether they believed the government should continue making the cost-sharing payments to insurers while Congress continues to consider long-term changes in the law.

Grassley's office released a statement expressing skepticism about those payments. “Obamacare imposed unsustainable spending demands on the taxpayers for as far as the eye could see. We now see the result of the Obamacare house of cards collapsing under its own weight," Grassley's statement said. "Bailing out insurance companies to save a fatally flawed system without making reforms makes no sense. It’s fair to question whether it’s a responsible use of public dollars to prop up a failing law without meaningful, sustainable reform of the law.”

Ernst's office released a statement that didn't directly say whether she believed the payments should continue. "From 2013 to 2017, premiums in the individual market rose 110 percent in Iowa. Those increases occurred during the Obama administration when there was no question about the certainty of cost sharing payments, and shows just how fundamentally broken Obamacare actually is," Ernst's statement said. "While CSRs play a role in market stability, they do not prevent insurers from leaving markets and premiums from increasing. That’s why it is so important to continue to find a way of repealing and replacing Obamacare with patient-centered, affordable health care solutions."