Governors Urge Continued CSR Funding; California Regulator Jones Threatens Lawsuit

Best’s News Service via Bestwire – August 04, 2017 12:26 PM

WASHINGTON – A bipartisan coalition of governors has urged President Donald Trump to continue making payments to the cost-sharing reduction program that represents what the insurance industry says is the biggest firewall against the collapse of the individual health markets.

“The administration has the opportunity to stabilize the health insurance market across our nation and ensure that our residents can continue to access affordable health care coverage,” said a statement by the Health and Human Services Committee of the National Governors Association. “A first critical step in stabilizing the individual health insurance marketplaces is to fully fund CSRs for the remainder of calendar year 2017 through 2018.”

Committee co-chairs are Virginia Gov. Terry McAuliffe, a Democrat, and Massachusetts Gov. Charlie Baker, a Republican. The governors sent a letter earlier this year calling on Congress to fully fund the CSR payments.

“This is a necessary step to stabilize the individual marketplaces in the short term as Congress and the administration address long-term reform efforts,” the statement said. “The uncertainty surrounding CSR payments is resulting in significantly higher premiums for consumers in many parts of the country and insurers exiting the marketplace altogether.”

The administration’s actions to weaken the ACA will cause average premium rates to double next year in California, said state Insurance Commissioner Dave Jones.

“Insurance companies have had to make decisions about health insurance premiums and market participation for 2018 under the cloud of President Trump’s actions undermining the Affordable Care Act,” Jones said.

With the failure of congressional efforts to repeal the ACA, the president unleashed a series of twitter threats that he would immediately stop the payments, which are due this month (Best’s News Service, July 31, 2017).

If the president does cut off funding, Jones said he would file suit.

“I urge President Trump to stop undermining the Affordable Care Act and to follow his constitutional responsibility as president under the Constitution to continue to enforce the Affordable Care Act,” he said at a press conference.

“However if President Trump continues to insist on not making the cost-sharing reduction payments,” Jones said, “then I will sue this administration on behalf of consumers in the state of California. The president and Republican members of Congress must do their job and make sure the payments are made.”

The presidential threat may be blunted a bit by a recent ruling which allows the states to defend the legality of the ACA program in litigation pending in federal appeals court, said Ursula Taylor, an attorney and partner with Butler Rubin Saltarelli & Boyd LLP, a litigation firm based in Chicago.

“The current administration could still decide to try to wreak havoc on the ACA markets by refusing to pay,” Taylor said. “But in that instance it would be much harder to claim that this Armageddon was caused by President Obama, Democrats or anyone else.”

However, Taylor, who focuses health care, insurance and reinsurance litigation, remained upbeat the payment will be made.

“I think the CSRs will continue to be funded because the political ramifications are just too great,” Taylor told Best’s News Service. “Nobody wins by pulling the plug.”

Although the individual markets remain fragile, the Centers for Medicare and Medicaid Services released good news this week. A new CMS report shows the number of ‘bare’ counties – those counties with no insurer participating in the ACA exchanges — has been reduced significantly. That number has dropped, from 47 counties with no coverage at the beginning of June to just 19 counties with the latest report released on Aug. 2. That represents a reduction of 59.6%.

In Washington, a federal court has rejected claims made by Community Health Options, a nonprofit Consumer Operated and Oriented Plan licensed in Maine, which filed a lawsuit last year to recover $22.9 million it claims were owed under an ACA premium stabilization program.

The government did not make full reimbursements when payments into the program fell short (Best’s News Service, Aug. 12, 2016).

Judge Eric Bruggink, of the U.S. Court of Federal Claims, sided with the government, which argued that that Congress did not intend to obligate any payment of money beyond what was collected under the risk corridors program. CHO has filed for an appeal.

(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)