May 07, 2021

CBO: Ending cost-sharing reduction payments will increase premiums, federal deficit

16 Agosto 2017, 01:41 | Bibiana Flor

President Trump at a listening session with health insurance executives at the White House earlier this year. Aude Guerrucci Bloomberg Getty Images

President Trump at a listening session with health insurance executives at the White House earlier this year

Faced with deep internal divisions and public opposition, congressional Republicans have failed to execute their promise to "repeal and replace" Obamacare.

It's about as classic a penny-wise, pound-foolish decision any president or Congress could make. The subsidies are expected to cost the government $10 billion in 2018.

- Consumers who now qualify for tax credits to offset their monthly premiums would be largely shielded from the estimated 20 percent jump in the cost of a standard "silver" plan, because of the automatic increase in the ACA's premium subsidies.

Furthermore, the report said, insurers in some states might simply decide to withdraw from the market due to "substantial uncertainty" about how subsidy cuts might affect their bottom line.

The CBO's analysis finds that savings from non-payment of the CSRs and the increased premium subsidies roughly net out for consumers earning between 100 and 200 percent of the federal poverty level.

"About 5 percent of people live in areas that would have no insurers" in the individual insurance market in 2018, the budget office said. By 2020, however, the report says insurers would return after observing how markets respond under the new policy.

On Tuesday, Nevada Gov. Brian Sandoval announced that the insurer Centene would offer plans in 14 counties that had been at risk of having no insurer selling health plans on its Affordable Care Act marketplaces.

Horizon attributed about 8.5 percent of that increase to the Trump administration's indifference to the "individual mandate" - the requirement that everyone buy insurance or pay a penalty at tax time, according to the company's rate request. Trump would cut off a subsidy that only impacts the silver plans, and wind up jacking up subsidies for all plans in the process. For people getting subsidized coverage, that added expense would be borne by the federal government and their costs would be little changed, the CBO said. The Obama administration, which had requested an appropriation, chose to pay them anyway.

But although the ACA requires insurers to provide the discounts, congressional Republicans previously argued in court that the Obama administration could not reimburse insurers unless Congress included the funding in an annual spending bill.

Last year, a federal judge sided with House Republicans, ruling although the payment had been authorized under the law, it had not been appropriated. Health and Human Services Secretary Tom Price has repeatedly left open the question of whether the payments will be made. The ruling was stayed pending appeal, and has been on hold since Trump won the presidency.

The current administration's stance is that it could drop the case-and stop making the payments-at any point.

But reports this year suggest insurance profits are up and markets are stabilizing.

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