Blue Cross rate hike in N.C. is a warning on gutting Obamacare

North Carolina health insurer merits praise for its clear, courageous assessment of how ongoing political gamesmanship in Washington, D.C., over health reform funding could painfully affect the pocketbooks of consumers who buy insurance this fall.

Minnesota legislators and the state’s congressional delegation should be paying close attention. It’s complicated, but important because the problem spotlighted by Blue Cross and Blue Shield of North Carolina could have a uniquely painful impact here: jeopardizing a financial underpinning of the state’s popular MinnesotaCare program. More than 84,000 Minnesotans rely on this public health care program for working families. Any federal funding shortfall could weaken their coverage or put a hurt on the state budget. Members of Congress should be doing everything they can to head this off.

Late last week, the North Carolina insurer announced it is seeking a hefty rate hike for 2018 coverage. It wants to raise rates for plans sold on the private, individual health insurance market by 22.9 percent — a figure that likely signals price hikes elsewhere. But what garnered national attention was Blue Cross’ willingness to lay the blame for the increase on the Trump administration and congressional Republicans. The insurer said it would have sought a much more affordable 8.8 percent increase had it not been for the uncertainty over what are known as “cost-sharing reductions,” or CSRs.

CSRs are a less-well-known way that former President Barack Obama’s Affordable Care Act helps needy consumers. In addition to the law’s tax credits to help pay premiums, CSR aid is available for those who qualify to pay for annual deductibles and other out-of-pocket expenses. About 7.1 million Americans qualified for CSRs in 2017, reducing out-of-pocket maximums by up to $5,587, according to the Kaiser Family Foundation.

At the root of the uncertainty Blue Cross cites are two factors. One is a Republican-led House legal challenge to funding CSRs. The second is President Trump’s public musing that he could cut off CSR funds if Congress doesn’t pass the health reforms he supports. The lack of clarity means risk-averse insurers will raise prices accordingly to prepare for the possible loss of CSR reimbursements from the federal government. Or insurers will limit their plan offerings or not offer any at all.

Minnesota consumers, thankfully, are relatively insulated from this fallout if they buy on the private market. Most Minnesotans who would qualify for CSRs are instead in the state’s well-liked, publicly run MinnesotaCare program. But trouble could loom for MinnesotaCare finances. The Obama reforms allowed the state to strengthen MinnesotaCare. One way it did so was by allowing the state to use the CSR money enrollees would have qualified for on the private market to instead fund more comprehensive and affordable coverage through MinnesotaCare.

The CSRs provided $94 million a year for MinnesotaCare in 2016 — 20 percent of its medical spending. That is money the state would have to find a replacement for if it goes unfunded. The uncertainty is a key reason the Editorial Board recently warned against drawing down the state health care access fund used to pay for MinnesotaCare. Minnesota Attorney General Lori Swanson merits praise for her decision to intervene legally with other states to protect CSR funding.

The state’s three Republican U.S. House members need to do their part, too. Ending these payments would hurt working families in Minnesota and create a significant budget headache for the Legislature. U.S. Reps. Erik Paulsen, Tom Emmer and Jason Lewis must put their home state’s needs first and wield their clout to keep CSRs fully funded.