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California will allow health insurers to file two sets of rates: One for 'Trumpcare,' other for Obamacare

  • The move comes just days before insurers are set to submit rate requests for 2018 plans in California.
  • Uncertainty about the fate of Obamacare and of a Republican replacement bill has raised the prospect of big price hikes in 2018.
  • A GOP replacement plan remains stalled in the House because not enough Republicans support it.
Supporters of the Affordable Care Act participate in a "Save Obamacare" rally in Los Angeles on March 23, 2017.
Ronen Tivony NurPhoto | Getty Images
Supporters of the Affordable Care Act participate in a "Save Obamacare" rally in Los Angeles on March 23, 2017.

There's Trumpcare prices, and then there's Obamacare prices.

California will let health insurers submit two different sets of rate request for their individual health plans for 2018 because of continued uncertainty over the fate of Obamacare, the Golden State's insurance commissioner said Friday.

That uncertainty has led to fears that insurers will raise prices sharply to account for potential changes to the Affordable Care Act. A Republican bill pending in the U.S. House of Representatives would make many changes to the ACA.

Insurers who sell plans in California — whose individual market is one of the largest in the United States — will be allowed to request so-called Trump rates, along with the rates they would like to see if Obamacare remains intact.

The office of the state's insurance commissioner, Dave Jones, said he is authorizing the dual submissions because "the Trump administration and House Republican Leaders continue to undermine the Affordable Care Act, creating instability in health insurance markets and causing health insurers to have to increase rates for the 2018 market."

Jones' move comes three days before Monday's deadline for insurers to submit preliminary proposed rates for 2018 to insurance regulators and to Covered California, the state's Obamacare marketplace.

Because of California's role as a leader in implementing Obamacare, other states might follow suit, and also allow insurers to file two different sets of proposed rates.

If they did so, it could add more fuel to the fire over the controversy about current Republican push to repeal Obamacare. That's because it would give insurance customers a clear picture on how much they would expect to pay if the law is changed, and how much they would pay if it remains intact.

Many GOP members of Congress in the past several months have been contacted and confronted by constituents worried that they will face higher premiums and out-of-pocket costs if the Republican plan becomes law.

California's proposed rates are scheduled to be made public July 17, and finalized in early October, less than a month before the Nov. 1 kickoff for open enrollment in 2018 coverage. Obamacare enrollment on Covered California is projected to be 1.4 million currently by Charles Gaba, operator of the Obamacare-tracking site ACASignups.net.

Insurers nationwide have been unsettled by the prospect that a Republican bill to repeal and replace major parts of Obamacare, if it became law, would leave them needing to charge much higher rates next year for individual plans.

The Congressional Budget Office, in analyzing a prior version of that bill, had said premiums would spike by double-digit percentages in 2018 and 2019 if it becomes law.

Another source of disquiet among insurers is the uncertainty about whether the Trump administration and Congress will allow the continued funding of subsidies to insurers to offset financial aid granted to low-income Obamacare customers for out-of-pocket health costs.

Gaba said that about 700,000 Californians currently benefit from that cost-sharing assistance.

The uncertainty has put insurers in a difficult position. If they underprice their plans for 2018 relative to the costs they are likely to incur under the Republican bill, they would lose money. But if they overprice their plans relative to the current health-care law, and it remains in place, they risk losing business from customers turned off by the higher premiums.

Jones' announcement came a day after Covered California issued a dire warning that the failure of the federal government to fund cost-sharing subsidies "could result in an estimated premium rate increase of 42 percent on average in California for 2018."

Covered California also warned that "failure to enforce the penalty for not having health insurance could result in total premium increases of more than 28 percent, and up to 350,000 consumers who would otherwise get coverage likely going uninsured in 2018."

Republican leaders in the House so far have avoided bringing their Obamacare replacement bill to a vote because not enough members of the GOP caucus have agreed to support it. Republicans hold a majority in the House, but can afford to lose only around 21 GOP members on a vote on the bill, known as the American Health Care Act.

On Thursday, a group of health insurance lobbyists, health-care providers and business lobbyists warned that if the cost-sharing subsidies are eliminated for low-income Obamacare customers, "consumers' access to care is jeopardized, their premiums will increase dramatically, and they will be left with even fewer coverage options."

"Funding this critical financial assistance for at least two years is the only way to protect these consumers," the group said. "Clarity and commitment to this funding is needed to eliminate confusion and anxiety for consumers, and to allow health plans to make timely and appropriate decisions about market participation in 2018."

The group included America's Health Insurance Plans, the American Academy of
Family Physicians, the American Benefits Council, the American Hospital Association, the American Medical Association, the Blue Cross Blue Shield Association, the Federation of American Hospitals and the U.S. Chamber of Commerce.

Correction: Monday is the deadline for insurers to submit preliminary proposed rates for 2018. An earlier version misstated the year.

Watch: WH will still pay for Obamacare cost-share cuts