When insurers stopped receiving cost-sharing reduction payments from the government last year, many significantly upped premiums for certain health plans. Here’s more on why they did it, what they did, and six things healthcare executives should know.
When insurers stopped receiving cost-sharing reduction payments from the government last year, many significantly upped premiums for certain health plans. Here’s more on why they did it, what they did, and six more things healthcare executives should know.
Why they did it:
The federal government stopped making cost-sharing reduction (CSR) payments to health insurers last year, but insurers are still obligated to provide CSRs to eligible insureds. In order to cover the costs of CSR benefits, insurers had to raise additional premium revenue, says Morgan J. Tilleman, JD, senior counsel, Foley & Lardner LLP, a full-service law firm.
What they did:
Rather than simply raising the cost of all ACA health plans-which are tiered into bronze, silver, gold, and platinum plans that offer different levels of benefits-most insurers packed CSR-related premium rate increases only into silver-level plan premiums, says Christopher J. Metzler, PhD, JD, CEO, Gordium Healthcare, a multidisciplinary behavioral healthcare organization. That practice, known as "silver-loading," took advantage of a quirk in the ACA: The law uses the premiums for silver-level plans to determine the amount of federal subsidies available to individuals with annual incomes below 400% of the federal poverty level.
Six things health executives should know:
Because silver loading can make the popular on-exchange silver plans a relatively worse deal than bronze or gold plans, Tilleman says state actions to promote active enrollment by current silver policyholders (into bronze or gold plans) can make a significant difference in whether silver loading is neutral (or perhaps beneficial) to individual insureds or whether it harms individual insureds overall (because they are auto-enrolled in expensive silver-loaded silver plans).
Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.