By Kayla Tarlton
The Trump administration’s ongoing attacks on the Affordable Care Act (ACA) ramped up last Thursday when two different actions were announced on Thursday October 12. Today’s Trump Sabotage blog addresses one of those actions: cutting off federal funding for cost-sharing reductions (CSRs). A blog next week will address the executive order President Trump signed earlier on the same day that further threatens to destabilize the ACA insurance market.
Cancelling CSR Payments
CSR payments are reimbursements owed to insurers to cover the costs of extra out-of-pocket protections given to roughly 7 million low-income ACA marketplace enrollees across the country.
With open enrollment beginning in just a few weeks – November 1 – it is difficult to find any policy or political reasons for ending CSR payments except to cause maximum disruption to the ACA marketplace.
Ending the CSRs is not about deficit reduction. The Congressional Budget Office estimated that ending the payments would not only increase marketplace premiums by 20 to 25 percent and cause insurers to pull out of the market, it would also increase the federal deficit by $194 billion over the next ten years. This is because as premiums rise, the ACA requires that federal subsidies also rise in an attempt to keep insurance affordable.
It isn’t even clear that this is a politically wise move. Ezra Klein of Vox speculates that this decision may be a result of a flawed “theory of dealmaking,” that somehow Democrats will be blamed for hurting the ACA. Meanwhile, polling evidence shows the exact opposite – Americans believe that Republicans, who are in control of both the presidency and Congress, now “own” the ACA and should be held accountable if it “implodes”.
In setting 2018 insurance rates, some states assumed that CSR payments would continue. In those states, regulators indicated that they will allow insurers to raise their rates and re-file them, even though there is very little time left to get this done. The time crunch means insurers and regulators will have insufficient time to conduct a thorough analysis, possibly leading to higher rate increases than are necessary.
Many other states approved 2018 insurance rates assuming that the CSR payments would not continue. This report demonstrates that 26 out of the 35 states studied attributed a major portion of their 2018 rate increases to this latest act of Trump sabotage.
Governor Malloy responded to the president’s move on Twitter, calling the decision to cut off cost-reduction subsidy payments “vindictive and deliberately designed to sabotage healthcare insurance markets.” Last Friday, Connecticut’s Attorney General George Jepsen signed on to a lawsuit with many other states seeking an injunction that would force the administration to continue making CSR payments.
Connecticut’s Insurance Department anticipated CSR payments would come to an end when it approved an average additional 16.7% rate increase for 2018, applied to the Silver exchange plans, for increases near 30% in total over 2017 rates. Go here to see more information about approved rates by health plan. Connecticut marketplace customers who qualify for tax credits to help them pay their premiums will be protected from these rate increases, as their federal subsidies will rise by an equal amount.
However, the 25% of Access HealthCT enrollees that do not qualify for federal assistance will be responsible for these higher premiums. It will be important for these customers to take the time to fully explore their options both inside and outside of the marketplace in an attempt to find an affordable plan that meets their health needs.
To add to the confusion, President Trump told Republican Senator Lamar Alexander by phone on October 14th that he wants to see a bill in Congress that funds the CSRs that he cut off abruptly on October 12. On October 17, Senator Alexander and his Democratic counterpart, Senator Patty Murray, announced they had come to an agreement on a bill to fund the CSRs. The deal would continue CSR payments through 2019 and restore the $106 million in outreach to encourage enrollment in the ACA exchanges.
Despite this bipartisan agreement, it remains unclear whether the Alexander-Murray bill can pass the Senate and even less clear if it can pass the House, particularly as Paul Ryan just announced he is opposed to it. The biggest wild-card of all remains President Trump, who alternately praises the bipartisan bill or describes it as an insurance company bailout, showing once again that his I-broke-it-so-Congress-can-fix-it approach is extremely destructive.