Payers Express Concern Following Cost-Sharing Reduction Cuts

October 16, 2017 - Several payer organizations have expressed deep concerns after President Trump announced plans to end the cost-sharing reduction (CSR) subsidies for ACA individual plans.

Organizations including AHIP, AMA, and AHA have previously urged Congress to step in to protect the CSRs, a suggestion that has been echoed by many since the cuts were announced.

Payers across the country have been raising their 2018 premiums throughout the past year in expectation of the cuts to the subsidies, which normally offset the cost of high-risk, more expensive enrollees.

The reactions rolling in from industry stakeholders express uncertainty, frustration, and disappointment in President Trump’s decision.

AHIP, BCBSA emphasize the benefits of the CSRs for individuals and insurance markets

Shortly after the President’s announcement, AHIP and BCBSA highlighted the benefits of the CSRs for payers and health insurance consumers in a joint statement.

“Millions of hard-working Americans with modest incomes depend on cost-sharing reduction (CSR) benefits to get access to medical care,” the organizations said.

“These benefits help real people every day, and if they are ended, there will be real consequences. These payments are not a bailout – they are passed from the federal government through health plans to medical providers to help lower costs for patients who see a doctor to treat their cancer or fill a prescription for a life-saving medication.”

Both groups added that terminating these payments lowers consumer choice, destabilizes local insurance markets, and increases consumer costs.

“We are committed to pursue every possible path to ensure that all Americans who depend on these benefits can continue to get the care they need when they need it,” the organizations concluded.

BCBS of Massachusetts encourages bipartisan solutions

Andrew Dreyfus, President and CEO of BCBS, made a public statement regarding the Administration's latest actions on healthcare.

"We are deeply concerned that the Administration's recent actions will create further instability in the insurance market and threaten our shared goal of providing affordable and quality coverage and care to everyone, regardless of economic status, age, or condition,” Dreyfus said.

“At Blue Cross and Blue Shield of Massachusetts, our highest priority is ensuring that quality health coverage is accessible and affordable for our members, employer customers, and the community.

Dreyfus added that the actions may present a risk to enrollees that need immediate healthcare coverage, but may not be able to afford it because of the CSR cuts and an executive order to boost association health plans.

“We encourage policy makers to work in a bipartisan spirit to improve the Affordable Care Act to create a health care system that is high quality, affordable, and sustainable."

AAA urges Congress to help lower premium increases

Following the CSR cuts, the American Academy of Actuaries (AAA) suggested that Congress should enact policy that permanently funds the CSRs to payers.

“Higher premiums are necessary when CSR reimbursements to insurers are not made,” said Academy Senior Health Fellow Cori Uccello.

“In states where rates for 2018 were filed assuming federal CSR payments would be made, premiums may be insufficient to cover the cost of care, which could lead insurers to reconsider their decisions to participate in the market. Permanently funding the CSR reimbursements through congressional action is needed to avoid further premium increases and insurer market withdrawals that could lead to a loss of coverage.”

The CSRs are subject to Congressional appropriation, so AAA believes that Congress can ultimately decide to stabilize premiums and insurance by maintaining funding.

“Enrollees who receive premium subsidies would be insulated from the full increase in premiums caused by the end of CSR reimbursements, but enrollees who don’t could face the full brunt of the increase, potentially reducing enrollment, increasing the uninsured population, and deteriorating the risk pool,” Uccello added. “Permanent congressional appropriation of CSR reimbursements could prevent these destabilizing effects.”