Dive Brief:
- The Trump administration plans to cut off cost-sharing reduction (CSR) payments to health insurers that participate in the Affordable Care Act (ACA) exchanges. The White House confirmed the news late on Thursday evening after a Politico report broke the story.
- The move to eliminate CSRs, which help insurers finance out-of-pocket healthcare costs for low-income consumers, will deal a significant blow to the ACA exchanges after Republicans were unable to repeal and replace the law through legislation.
- "After a thorough legal review ... we believe that the last Administration overstepped the legal boundaries drawn by our Constitution," the White House stated. "Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.”
Dive Insight:
The latest news shows how the Trump administration is moving forward with its oft-stated plan to sabotage the ACA and force its supporters to negotiate major changes to the healthcare law.
The issue goes back to 2014 with the creation of House v. Price (previously v. Burwell under President Barack Obama's administration). GOP lawmakers alleged the government is subsidizing coverage for low-income Americans with money that Congress didn’t appropriate for that purpose.
U.S. District Judge Rosemary Collyer ultimately decided with the House. The White House under Obama had appealed the decision and the U.S. Court of Appeals for the D.C. Circuit placed a stay of proceedings on the case to allow the suit to proceed under the Trump administration.
Trump has threatened to stop CSRs since taking office, but the administration has continued to pay them each month. Payers have emphatically said the payments are necessary to keep the exchange markets viable. Without the CSRs, payers will likely raise premiums substantially or drop out of the exchanges altogether.
This move is almost certain to receive a hostile reaction from the healthcare industry, as well as state health departments and governors, including even those from many red states. Continued funding for the CSRs, which has amounted to about $7 billion this year, had bipartisan support in Congress as well.
On Friday morning, American Medical Association President Dr. David Barbe stated the AMA is "deeply discourage" by the decision. "Republicans and Democrats alike have expressed concern about the affordability of healthcare coverage under the ACA, and bipartisan efforts have been underway in Congress to provide the specific authorization and funding for CSR payments to address the legal issues involved," he wrote. "This most recent action by the Administration creates still more uncertainty in the ACA marketplace just as the abbreviated open enrollment period is about to begin, further undermining the law and threatening access to meaningful health insurance coverage for millions of Americans. Our patients will ultimately pay the price. We urge Congress to accelerate its efforts to reinstate these payments before further damage is done."
America's Health Insurance Plans also disapproved of the decision. “We need constructive solutions that increase consumer choice, lower consumer costs, and stabilize local markets," the organization stated. "Terminating this critical program will do just the opposite. This action will make it harder for patients to access the care they need. Costs will go up and choices will be restricted."
The deadline for insurers to decide whether to participate in the exchanges and to set premium rates has already passed. Some states, such as California, had already set their rates with the assumption that payments would stop. There is little payers can do at this point to change next year’s ACA plans, but there is a chance they decide to sue the administration for this latest move.
A Congressional Budget Office report earlier this year estimated that eliminating CSRs would cause premiums to increase by 20% next year and result in a $194 billion increase to the federal deficit over the next 10 years. Insurers have said premium hikes could be much higher in some circumstances, and early filings reflected that.
The news followed another major development that would undercut the ACA, as Trump signed an executive order earlier Thursday rolling back some of the law’s requirements for health plans and protections for people with pre-existing conditions. The White House seems intent on destabilizing the ACA despite the repeated failures to pass repeal-and-replace legislation earlier this year.
A bipartisan group of senators had been working on a bill to fully appropriate CSRs, but it was held back by a last-ditch repeal effort that never made it to a vote. Nothing is stopping this legislation from moving forward and negating Trump’s decision to eliminate CSRs, however. But this Congress has not been known for swift action on any issue.
Payers aren’t the only group that has been vocal in support of the CSRs. Last month, eight major healthcare organizations, including the American Hospital Association and the American Medical Association, sent a letter to Congress that said a funding commitment of at least two years “would go a long way to bring much needed stability to the individual market and promote access to more affordable coverage and choices for millions of Americans.”