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Trump Plans to End Cost Sharing Reduction Subsidies for Payers

The White House has stated that it will not pay the Affordable Care Act cost sharing reduction (CSR) subsidies any longer, leaving payers and patients questioning the future.

ACA cost sharing reduction subsidies

Source: Thinkstock

By Jennifer Bresnick

- The White House has announced plans to scrap the Affordable Care Act cost sharing reduction subsidies for health insurers that have helped to keep premiums low and stabilize markets subject to the individual mandate.

The announcement came just hours after President Trump signed an executive order allowing payers to offer short-term, bare-bones association health plans (AHPs) which are not subject to all of the same consumer protection rules as ACA compliant programs.

Both actions have been immediately condemned by healthcare stakeholders as an attempt by Trump to undermine the ACA through administrative means after Senate leaders fell short of several attempts to repeal the legislation.

New York and California are among several states that have already threatened to sue the federal government for ending the CSRs.  Failing to make the payments is a questionable legal move, argued the attorneys general, which they aim to swiftly challenge in court.

Trump’s aggressive efforts to cause the ACA to “implode” have resulted in widespread premium hikes as insurers anticipated the loss of critical CSR funding to account for high-risk beneficiaries.

Insurers have raised their rates and fled the marketplaces for 2018 due to ongoing uncertainty about the payments. 

The Congressional Budget Office (CBO) calculated in 2016 that ending the CSRs would result in average premium increases of 20 percent by 2018 and 25 percent by 2020, a prediction that has come true in many markets.

Ending the payments would also result in a federal deficit increase of $194 billion between 2017 and 2016, the CBO added.

After dramatically slashing enrollment assistance funding, limiting the availability of the Healthcare.gov enrollment website during peak sign-up times, reducing the open enrollment window, preventing HHS staff from participating in enrollment events, removing protections on access to women’s health services, and appropriating HHS resources to create materials designed to create negative perceptions of the ACA, the White House has not been subtle in its efforts to cut the legs out from under the law of the land.

Just how high premiums will go once the CSR payments end remains to be seen, but insurers who have already expressed frustration over the uncertainty of the marketplace and strongly condemned previous Republican attempts to dismantle the ACA are unlikely to be pleased by these newest developments.

Update: American Medical Association President David O. Barbe, MD, has released the following comment on the White House's decision.

"The AMA is deeply discouraged by the Administration’s decision last night to end the cost sharing reduction (CSR) payments to insurers, which are used to reduce deductibles and co-payments for low-income enrollees in the marketplace plans created under the Affordable Care Act (ACA). Republicans and Democrats alike have expressed concern about the affordability of health care 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."

"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."

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