The head of the Centers for Medicare and Medicaid Services said Tuesday that the expansion of cheaper, short-term plans wouldn’t lead to higher premiums on Obamacare exchanges.
CMS Administrator Seema Verma said the agency is assessing the impact that the expansion could have on Obamacare premiums. But she disagreed with warnings from numerous experts that the cheaper plans would cause prices on Obamacare’s insurance exchanges to surge.
“Actuarial studies show that impact will not be that high,” Verma said at a Washington Post event.
The administration is evaluating a proposed regulation to expand short-term plans from 90 days to nearly 12 months.
Experts say the expansion would cause healthy people to flee Obamacare’s insurance exchanges, which are in the individual market used by people who don’t get insurance through a job or the government.
A short-term plan does not have to abide by Obamacare’s quality requirements, which include covering essential health benefits and preventing insurers from charging sick people higher premiums.
Since the plans don’t have to meet Obamacare’s rules, they are often cheaper. Experts say the plans would lead to higher premiums on Obamacare’s exchanges because younger and healthier people will sign up for the short-term plans.
Verma said premiums for Obamacare have soared in recent years as insurers leave the exchanges. She said that, as a result, insurer choice is limited in many parts of the country.
“We are seeing higher deductibles and we have states that only have one choice of health plan and we have 50 percent of our counties that only have one plan,” she said.
Prices have risen because of a series of factors, not the least of which was moves by the Trump administration to eliminate insurer payments called cost-sharing reduction payments. The payments reimburse an insurer for a requirement to lower out-of-pocket costs for low-income Obamacare customers.
Insurers in Virginia and Maryland have proposed double-digit rate hikes for 2019 partly because of the elimination of the payments and the elimination in 2019 of the individual mandate that everyone have insurance.
Other factors listed by insurers include the worsening insurance risk pool, as not enough younger people have signed up for Obamacare to compensate for claims from sicker people.
