The Congressional Budget Office estimates that the updated Alexander-Murray cost-sharing reduction (CSR) payment bill would reduce premiums in Affordable Care Act (ACA) plans by 10% in 2019 and an additional 20% in both 2020 and 2021.
Senate HELP Committee leaders Sens. Lamar Alexander, R-TN, and Patty Murray, D-WA, proposed reinstating the CSR payments last year. Meanwhile, Sens. Susan Collins, R-ME, and Bill Nelson, D-FL, proposed a reinsurance program. A revised proposal combines these two ideas, and could be part of a spending package that Congress may vote on next week to avoid a third government shutdown.
The revised proposal includes: three years of CSR payments; $30 billion over three years for a reinsurance program for high-risk members; a clause forbidding payers from using the stabilization funds to cover abortions; flexibility for states to design their own health plans; and the allowance of short-term catastrophic health plans for everyone.
Despite Republican control of Congress and the White House, they have fallen short of their promises to fully repeal and replace the ACA.
The CSR payments and/or a reinsurance program (or the proposal’s other provisions) likely wouldn't pass on their own. They have a better chance if buried in a larger budget bill. Whether that’s the best plan for the ACA exchanges remains an open question.
President Donald Trump stopped CSR payments to insurance companies in October. The CSR payments helped keep down out-of-pocket costs for lower-income Americans with ACA plans.
At the time, ACA advocates and payers charged that stopping CSR payments would destabilize the exchanges further and increase healthcare costs for ACA plan members. However, the added costs caused a health law provision to kick in that lowered premiums for lower-income Americans. The subsidies didn't help middle-class or higher income people in ACA plans, though, who saw their premiums increase further.
Despite the possibility of reinstating CSR payments and creating a reinsurance program, there has been disagreement in recent weeks about whether doing so would improve the ACA exchanges.
The Center on Budget and Policy Priorities is on the side of keeping things the same unless CSR payments and a reinsurance program are part of a large plan that includes additional reforms. Its recent report said between 1.6 million and 3.3 million people, or 18% and 36% of users of the marketplace in 39 states with the federal-run exchange, could face higher costs if Congress restores CSR payments without additional subsidies.
Not everyone shares that sentiment. Oliver Wyman recently released a report that said restarting CSR payments and creating a reinsurance program would cut ACA plan premiums between 20% and 40% and lead to 3.2 million more insured people.
Covered California, which connects the state's consumers with ACA plans, also doesn't back the current state of the exchanges. The group recently suggested a packet of items that could help lower premiums and spark more payer competition in the exchanges.
Covered California predicted premium increases between 12% and 32% for every state in 2019, and between 36% and 94% over a three-year period without changes to the marketplace.
The report suggested a number of initiatives, including a reinsurance program or state-based high-risk pool and restoring CSR payments. Other pieces included delaying a health insurance tax beyond 2019, increasing financial assistance to members and auto-enrolling people in ACA plans who lose employer-based coverage, earn too much for Medicaid or age out of parent health plans.
.@AARP urges Congress to take action to lower premiums on the individual market & make coverage more accessible and affordable for all, especially the 6 million 50-64 year olds who get their coverage on the individual market. (1/2) pic.twitter.com/YsHrwffsLA— Sen. Susan Collins (@SenatorCollins) March 14, 2018