For months, President Donald Trump threatened to nix an Obamacare provision that helped health insurers pass along lower costs to their poorer customers.
Late Thursday, he followed through with that promise, signing an executive order that will immediately eliminate these "cost-sharing reductions."
Although criticism from the broader industry was swift, BlueCross BlueShield of South Carolina — the state's largest insurer and the only one selling Affordable Care Act policies here — already planned for this scenario by pricing its 2018 Obamacare plans an average 31 percent higher to mitigate the potential financial fallout.
That's why a spokeswoman for the insurance company said Friday that Trump's order won't impact patients who rely on Affordable Care Act coverage in this state.
"Any time there is news about a proposed change our customers have questions," spokeswoman Patti Embry-Tautenhan said. "This is no different. Our message to them is that at this time, nothing has changed."
To be clear, Trump's order won't impact the individual subsidies that most health insurance shoppers receive to lower the cost of their monthly premiums. Those subsidies will continue to be funded. But from the health insurance industry's standpoint, the president's decision will significantly undermine market stability because insurance companies will cease to receive billions of dollars every year in federal payments.
Data provided by The Associated Press show insurers in South Carolina received more than $191 million in cost-sharing reductions in 2016. Across the country, the total exceeded $6 billion.
In a prepared statement, America's Health Insurance Plans argued the country needs "constructive solutions that increase consumer choice, lower consumer costs, and stabilize local markets" and that Trump's order "will do just the opposite."
S.C. Department of Insurance Director Ray Farmer, whose agency approved that 31 percent rate increase earlier this year, explained that two-thirds of the hike is tied directly to the issue of cost-sharing reductions. He wanted Congress to extend the program through 2019 — and testified as much before a congressional committee last month — but said Friday that South Carolina made preparations assuming that federal lawmakers wouldn't act in time.
"The State of South Carolina is prepared for this contingency,” Farmer said. “We encouraged our one carrier on the exchange — BlueCross BlueShield — to make their filing based on the fact that (cost-sharing reductions) may not be funded. And they did. That’s why we had such a tremendous rate increase.”
Embry-Tautenhan said 82 percent of Obamacare customers in South Carolina receive individual subsidies to lower their costs and will be largely shielded from this rate increase. She said most of them will end up paying about $10 more per month next year.
But Medical University Hospital CEO Patrick Cawley expressed concern that Trump's order will make health insurance unaffordable for some people and will hurt the hospital's bottom line.
"The potential impact of that is very worrisome," Cawley said. "What worries me more, as a doctor, is that (patients) are sick, they don't get care, then they show up in our ER with a problem that could have been taken care of four months ago, or maybe the problem was reversible four months ago, but is no longer reversible."
Jim Ritchie, a former Republican state lawmaker who now runs the S.C. Alliance of Health Plans, said the Trump order may prompt Congress to accomplish what it has, so far, failed to do: tackle health care reform.
"I think (Trump) is taking action that he believes keeps his promises to the voters on track," Ritchie said, "and forcing Congress to address health care more aggressively."
In a separate executive order on Thursday, Trump ushered in other changes to the country's health system system, among them, a new rule that will allow small businesses to band together and offer coverage to their members across state lines. But in recent memory, a similar coalition in South Carolina became insolvent.
In 2014, the South Carolina Health Cooperative shut its doors with very little notice, unable to pay claims for more than 4,000 beneficiaries and their dependents. It was established only two years earlier by small business owners in the state.
Ritchie said the Alliance of Health Plans supports ideas that will lower costs and improve accessibility, but he said his group remains "committed to state-based regulation of health insurance markets."