Illinois Statutes Chapter 215. Insurance § 210/10. Findings

(1) Section 1402 of the Patient Protection and Affordable Care Act requires health insurance issuers to provide cost-sharing reductions to low-income marketplace consumers below the 250% federal poverty level who choose a silver level plan; it also requires the United States Department of Health and Human Services to reimburse issuers for cost-sharing reductions. Cost-sharing reductions are important because they help low-income marketplace consumers afford out-of-pocket costs, including deductibles and copayments, and therefore keep them in the marketplace.

(2) On October 12, 2017, the federal government, through executive action, announced that it would be discontinuing cost-sharing reduction payments to issuers in the Patient Protection and Affordable Care Act marketplace. Illinois, like the majority of other states, took action to mitigate the losses that Illinois issuers would endure without the federal cost-sharing reduction payments by adopting a practice called “silver loading” or “cost-sharing reduction uncertainty cost” beginning in the 2018 plan year. Silver loading allows issuers to increase their silver plan baseline premiums to make up the costs lost from the missing federal cost-sharing reduction payments. Most of these premium increases are offset by higher advanced premium tax credits from the federal government.

(3) However, due to silver loading and resulting pricing of silver plans in the Illinois marketplace, it appears that the current metal-level premiums in the Illinois marketplace are misaligned and do not reflect coverage generosity of the plans. The fact that silver plans are now overpriced for enrollees ineligible for generous cost-sharing reductions has driven some of those enrollees into non-silver (mostly bronze) plans with levels of cost sharing that are a worse match for their needs. In other words, Illinois marketplace consumers could be currently paying more than they should for low value plans and less than they should for high value plans.