Insurance companies in Montana last week filed their proposed prices for 2018. They send them to the state insurance commissioner for review and generally don't reveal what they plan to charge until after the commissioner has had a chance to look at their proposals. Setting prices is particularly challenging when Congress is at work on a replacement for the Affordable Care Act.
We talked about that challenge and what the future of Montana's health insurance market looks like with Todd Lovshin, a vice president at PacificSource, one of the three insurance companies that sells individual and small business policies in Montana. Pacific source covers about 45,000 Montanans.
I asked Lovshin for PacificSource’s top concerns as Congress works on health care.
Todd Lovshin: We’re concerned about huge disruptions within the marketplace. We really hope that whatever policies they choose are implemented over a period of time to create some stabilization both in the individual and small group market, giving us and people here time to adjust so that it's not coverage one day and no coverage to the next, and that there is an opportunity to really plan out and to make sure that people are getting the coverage that they need and that we have the policies in place. That we're following the new guidelines, whatever comes out of the Senate and the house.
Eric Whitney: It sounds like you think it's unlikely, even if the Senate makes some big changes, and a new health law is signed by the President, that it's unlikely that you'd need to go back to your proposed 2018 rate filing and modify that. Or do you think it might need to be modified? And can you even do that?
TL: All great questions I don't know the answers to. I know that (Montana Insurance) Commissioner (Matt) Rosendale and his staff, we're already working closely with them. We'll be monitoring what happens on the federal level and making sure that we can adjust as needed. There is certainly a period of discussion through this summer. And so as the Senate looks at their version of the bill will have some opportunity to make some adjustments. Perhaps the largest thing is really about whether or not Congress funds cost sharing reductions, the assistance to individuals in 2017 and ‘18 to make sure that we really stabilize the market and people have that opportunity to continue to have coverage.
EW: Do your rate filings assume that those are going to stay the same?
TL: They assume that the current law is going to be enforced to 2018. We're hopeful that some of these changes being contemplated now will be made in an incremental way, and approaching more and changes in 2019 and 2020.
EW: I'm hearing all kinds of things about whether the cost sharing subsidies will be fully funded in 2018. My take is there is there is no guarantee that they will be in 2018. Do you have different information than that?
TL: We don't. The President and others are talking about removing or not fully funding those cost sharing reductions.
EW: What would that mean in terms of impact to your company?
TL: We're worried what that does to the marketplace. Clearly if the cost reductions go away fewer people will be in the market and that will have impacts hospital systems. We’ll have more uncompensated care, and that raises the costs for everyone. As medical costs go up premium costs go up, so it becomes a very driving factor in the overall cost of health care.
EW: Some Republicans are talking about, in health legislation going forward, removing the individual mandate, that's the legal requirement for most Americans to have health care coverage. What would that mean in terms of Montanans’ cost of health coverage?
TL: The current version of the House AHCA removes the individual mandate, but it puts in that if you don't have coverage when you're first eligible, you'll pay a higher premium. And I think personally that that will encourage folks to move into the market when they are first eligible. Now, it won't be a perfect solution, but we think that that gives folks in some sort of a carrot instead of the stick approach.
EW: Do you think that approach will result in net fewer people choosing to have coverage going forward?
TL: We hope not. But I think that the reality is that folks will make that decision about whether or not they can afford that. You know, if there are no cost sharing reductions, there are many different models out there that will show that it's likely that the individual market will take a bit of a dip, and fewer people will be covered. But there are some hopeful things in the discussion that may help keep those markets a little bit more stable.
EW: I think it's pretty clear that the Senate is going to write its own bill. It sounds unlikely that they're just going to modify the House bill, but there might be some elements of the House bill and what the Senate comes up with. Are there elements of the House bill that you think are good and should be part of a Senate bill? And there are other parts of the House bill that you would like to see not included in legislation going forward?
TL: The House bill contemplates an age band rating change, which means that folks who are younger may pay less than they currently pay. And folks that are on the older side of the spectrum would pay a little bit more than they currently pay. That really would allow a cheaper premium for those younger folks to get into the market. So 26 – 2- year-olds currently are subsidizing a little bit more on the older side. From our look, that age band change allows those premiums to be a lot lower in the younger age category, which would allow, we think, more people in that age with lower incomes and so forth to get into that market. We think that's a positive, but PacificSource really takes the approach, and of one that we're proud of, that these are really policy decisions being made by our elected officials. And at some point we can offer our advice, we can offer our learnings from the last five and six years of implementing the ACA, and we hope that some of those learnings transfer into where we might need to make some changes, and where we think that there are some better outcomes. But in the end it gets back to that, if they make these policy changes, we’ll adapt to our business model to make sure that we're following them. We think that there are some good conversations going on. And the ACA is not perfect, it has never been perfect, and the current House version is not there yet either, and we haven't seen the Senate version. But I think that there are some good discussions happening overall, and in a lot of areas.
EW: If major cuts are made to Medicaid, will that have any impact on premiums that folks in the private insurance markets pay in Montana?
TL: It will. Currently with the expansion of Medicaid, hospitals systems are seeing lower amounts of uncompensated care. They're actually being paid for the care that they're providing to the recipient. If that goes away, then hospital systems will have larger uncompensated care. All of our hospitals have to take any patient that comes in, and serve them. That has to be paid somewhere, right? And if we're not paying that through Medicaid expansion, those costs have to be borne by someone, and so that will increase the overall cost of medical expenses.
EW: Members of Congress that I've spoken to say that the Affordable Care Act needs to be repealed and replaced because insurance markets are “collapsing.” That insurance markets are in a “death spiral” because of the Affordable Care Act. Is that true?
TL: I can only speak from the perspective of Montana. I don't see the market collapsing underneath the current law. But again I think there are some changes that need to be made to that current law, or in any of the new contemplated laws that really focus on the stabilization of those markets, making sure that we can bring more people into coverage. That's helpful. Personally, I maybe a little bit more optimistic. I don't believe that the market here in Montana is collapsing. I think it has changed. But I don't think that it's collapsing.