Common Ground could net $56.8 million in unpaid federal subsidies

Judge orders HHS to pay $1.6 billion to insurers

Common Ground Healthcare Cooperative could receive $56.8 million in unpaid subsidies after a federal judge ruled in favor of 100 health insurance companies in a class action lawsuit brought by the Brookfield-based insurer.

The lawsuit stemmed from the federal government’s decision to end cost-sharing reduction subsidies that were intended to offset insurers’ costs of offering plans to low-income individuals under the Affordable Care Act. President Donal Trump’s administration announced the decision to end the subsidies in October 2017.

Despite the end in payments, insurers are still required to offer the plans, which caused them to lose millions of dollars in 2017 after they had set their prices for the plan year months earlier, according to Common Ground. Some insurers exited the market in 2018 as a result.

“We had to increase our premiums to consumers to make up for the lack of those payments,” said Cathy Mahaffey, chief executive officer of Common Ground. “So we’re pleased, obviously, with the judge’s ruling … but from our perspective this is money that’s due back to our members because we had to increase premiums to account for it.”

Under the decision by the United States Court of Federal Claims, the U.S. Department of Health and Human Services would be required to pay a total of $1.6 billion in unpaid subsidies from 2017 and 2018 to the roughly 100 insurers that are part of the class action. It is expected that the federal government will appeal the case.

Children’s Wisconsin’s Children’s Community Health Plan would receive $20.5 million in unpaid subsidies under the ruling. Marshfield-based Security Health Plan of Wisconsin is due $20.2 million. Wausau-based Aspirus Arise Health Plan of Wisconsin, Inc. is due $7.7 million.

Common Ground, a nonprofit health insurance company, was the lead plaintiff in the suit. It sells insurance in 20 counties throughout eastern Wisconsin.

“Common Ground Healthcare is a nonprofit cooperative that is run by and for our members,” Mahaffey said. “We knew we had to stay in the market and fight for the people we insure. This is their money; they deserve to get it back and we hope that health insurance consumers across the country will benefit once the appeals are exhausted.”

Mahaffey said the premium increases particularly affected higher-income health insurance consumers, such as the self-employed, CPAs and independents consultants who buy insurance through the individual marketplace.

“The end of cost-sharing reduction payments caused insurers to increase silver premiums, which raised the amount of tax credits people making less than 400 percent of the federal poverty level received,” she said. “But people with incomes over 400 percent, who are not eligible for the tax credits, have to pay the full amount of the higher premiums to get comprehensive coverage.”

After posting losses in its first three years of operation, Common Ground reported its first profitable year in 2018. It recently announced it will pay out $18.5 million in premium rates to its individual members who paid premiums for insurance coverage in 2018. The ACA requires insurers to rebate individual premiums when medical claims costs over a three-year period average below 80% of premiums received.

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